Research and write six current topics in Industrial And Labor Relations
1-THE DECLINE IN UNION MEMBERSHIP IN THE UNITED STATES
Labor unions were formed with the intention to protect the interests of a worker and labor class. After Industrial Revolution, labor was employed at large scale in different industries. Workers, in various industries, came to realize that most of the rights, of labor class or workers, were overlooked and companies/businesses considered labor as an instrument to generate and swell the revenue. In earlier economic theories, labor was cardinal to production and the right emphasis was in labor for the production of goods and services. Therefore, businesses or organizations viewed labor as a tool of production and tool for generating revenue.
Also, it was also believed that higher the cost of labor, more expensive the products/services and thus lower the profit. Therefore, firms intentionally kept wages low, so that products and services could remain competitive. It led to the creation of unions, which had political-economic agendas and objectives. The industrial activity became more intense and profits swelled, more this realization became stronger that workers’ rights are being neglected by profit-oriented businesses and firms. In different parts of the world, unions played a different part. For instance, in the European continent, labor unions were very much influenced by leftist and socialist political-economic notions, whereas in the United States, unions were more independent of political influence and their agendas and objectives were more economic than political. However, unions in both continents believed that they must have political relevance, of unions, as it is imperative to meet objectives (Davidson).
As the industrial/corporate system has evolved, there have been several changes in both organizational structure and behavior. Several studies have identified various factors, which improves the capacity and ability of an organization, operating in any sector of the economy. Two of the factors, which have been frequently and extensively discussed, are a human resource and work environment. It is asserted that of all resources, at the disposal of a firm or organization, most sensitive and valuable resource is human resource, which exploits other resources to meet identified objectives of a firm operating in a corporate or economic system. Studies also suggest that when the work environment is diverse, productive and healthy, the work-deviance, of human resource/employees, is positive. It adds value to the product or service that is produced. Therefore, organizations have focused on work environment and human resource to meet objectives. As human resource and relations with human resource have become a serious concern and strategies are formed to address their concerns, the role of labor unions has diminished.
According to the statistics, union membership declined 0.4% in 2014, and it has dropped to 10.7%. In public sector organizations, union membership is higher in comparison to the private sector, where the union membership is 6.4%. The total number of workers, who are a member of unions, is 14.6 million after declining 240, 000 from the previous year (Cox).
Other reasons for the decline are the structure and objectives of the union. According to the experts, unions have not evolved with time and their ability to collectively bargain had diminished a lot. Therefore, the relevance of unions is dying and causing great concern, as, during this time of considerable economic uncertainty, unions can play a significant and decisive role in the economy.
2-CONCESSION BARGAINING
We have discussed in great detail how unions were formed and what were their original objectives. We have also discussed how unions failed to evolve, which is one of the major causes of the decline in union membership. We have also discussed that instrument, which union uses to mount pressure on organizations, firms or companies, is striking. However, for a strike to be impactful, the size of the union must be enormous. When the size of a union is considerable, it is more relevant because of it can mount tremendous pressure on organizations, firms or companies to accept their demands. For instance, if in a company has employed 1000 employees, out of which 100 are a member of a union, the size of a union is small, and it cannot mount severe pressure. The ability to halt operations, partially or wholly, gives weight to a union.
However, studies suggest that it is not only the size of the union, which mounts pressure, but also there are other factors, which are as relevant as the size of the union. For instance, when the economy is on an upswing, businesses earn swelled profits. During this period, businesses expand their operations, and they rely on a human resource or their employees to meet their objectives. During this period, strikes can force organizations, firms, or companies to meet immediate demands of workers. It is because boom period is short and the companies intend to earn as much profit as they could during this period when consumption is high.
However, in the different situation, unions lose their relevance, and they might be forced for concession bargaining. The term means that a union during a collective bargain gives up all the previous benefits, such as healthcare payments and raise in salaries, in exchange for job security. During the recessions, when the economy is downswing, unions are forced to give-up previous improvements to ensure that employees would not be terminated or organization would not down-size the body of employees. It is a defensive strategy, which focuses on both short and long-term. In short terms, because of concession bargaining, wages of workers reduce and other privileges evaporate, however they can keep their employment.
As the unions know that recessions end eventually, because of the use of expansionary fiscal and monetary policies; therefore, they will be able to regain those improvements or privileges, which they have lost during the recession through concession bargaining. It suggests that concession bargaining is an instrument, which has its relevance and unions employ this instrument to meet various kinds of objectives, which include job security. From the discourse, it is also evident that the size of a union is relevant under particular conditions, such economic upswing. When the economy is in crisis, unions lose their relevance and their ability to effect particular realities also diminish.
As the unions are becoming an obsolete concept; new systems are emerging to address these issues. For instance, progressive governments are actively supporting employees and taking measures to ensure their survivability during periods of recession and depression (Rasmus).
3-UNIONS AND EMPLOYEE PARTICIPATION PROGRAMS
Employee Participation Programs are controversial programs, which are vehemently opposed by unions. In such programs, employees are given the incentive to form self-directed teams, which establish priorities regarding employment. The Employee participation programs establish small committees, which are comprised of employees of a company, which hold meetings and determine parameters of work with the intention to increase the efficiency of organization and productivity. It must be acknowledged that for a company’s higher efficiency and productivity are of great concern and to meet these objectives it devises strategies and take various kinds of measures. However, it is widely believed that employee participation programs are devised to undermine unions or the committees, which are formed through these programs, intended to subvert the influence of unions.
We already know that unions are designed to address issues like working hours, healthcare, and wages; however, these programs in an indirect manner try to touch these subjects. In fact, in many cases, it is employers, which form committees through these programs to increase their influence in matters related to wages and working hours.
From legal point of view, it is apparent that when a committee formed under the pretext of employee participation program, addresses specific sensitive issues, which fall in domain of company and union, these committees are violating clauses of National Labor Relations Act, which apparently gives the right to the union to collectively bargain on the matters such as wages, work conditions, pay rate, working hours, health benefits etc. In fact, in some court hearings, participation programs, like UPS, are identified as sham unions, which are devised to protect interests of employers or company.
Some experts are of the view that Employee Participation Programs can benefit companies, without undermining the role and influence of unions. The concept is relevant in the context of a contemporary corporate system, and it can achieve those objectives, for which it is allegedly devised. However, this will require a sensitive approach from the employer towards the use of such programs as an instrument to realize the objectives of higher efficiency and higher productivity. Also, unions must participate in such programs to keep a check on committees and teams, which are formed through such programs.
- These programs must have clear and declared objectives, and it must involve employees in the constitution of these programs so that the entire process remains
- The company or the employer should also continuously remind the employees the objective of these programs and must make it clear that these programs are devised to realize organizational and corporate objectives, such as higher efficiency and higher productivity. It should be made clear, to both employers and unions that these programs are not devised as an instrument to address matters pertaining, directly or indirectly, to wages, work environment, pay rate, etc.
- Also, the committees must be constituted by volunteers and not the elected employees, as it directly challenges the status of the union and its representatives. Also, the membership, of these committees must also be rotated to counter this impression that these committees are an instrument of employers (Sherk).
4-THE EFFECT OF UNIONS ON PRODUCTIVITY AND PROFITS
Since the creation of unions, the role of unions in productivity and economic profit is being debated. There seem to be camping, which propagate different theories regarding the effect of unions on productivity and profits. The neoclassical economists, in particular, believe that unions are detrimental for companies, firms or organizations because the very existence of labor unions undermines factors like labor productivity and demand/supply of labor, which are essential to consider and they directly impact profit and productivity. A company hires or prefers to hire those employees, which are highly productive. For this purpose, it devises instrument, such as interviews, to determine which potential employee is more productive and can earn higher profit to the firm. Also, companies use various mechanisms to ensure that the potential of an employee is maximally exploited so that firm, company, or organization could earn more by investing less (Gregory).
From various studies, we learn that higher productivity is gained by the optimal use of resources, which include human resource. Therefore, it is essential for companies to 1) increases the potential of employees, 2) exploit the potential maximally and 3) devise such mechanisms, which facilitate consistent performance from the human resource. This adds value to the final product and services, which makes a product or service unique, allowing firm, company, or organization to attain a competitive advantage over its rivals.
When resources are being exploited optimally, the cost of production reduces. It is why all firms and companies devise strategies and mechanisms to exploit resources optimally so that the cost of production could decrease. Any reduction in the cost of production leads to higher profits and in competitive markets, only by reducing the cost of production, profits can be increased. However, because of unions, firms are not able to implement these strategies as unions may oppose any changes to work-schedule, working hours and work environment.
The other school of thought asserts that unions can play a significant role in implementing these strategies and designs, which aim to increase both productivity and profit. As unions are considered pro-workers, when they assert such strategies and mechanisms, which are developed for particular reasons and objectives, there are high chances that these strategies, about optimal use of the resource, will be implemented efficiently at the tactical level.
It is assumed that companies are mostly shy to take unions on board in devising and implementing these strategies. There are several reasons for that; however, the principal reason is that companies, firms or organizations believe that unions only consider the interests of unions, which is not true as more unions are acknowledging that when companies earn more, they workers may benefit more. Therefore, it can infer that there is a trust issue between unions and companies, which keep companies from using unions as an instrument to implement such agenda or design, which aims to increase both productivity and profit. However, it must also be recognized that this entire exercise is cumbersome and lengthy, which is why all the parties, which are involved in it, must be patient and they must evolve their strategies as per the results from implementing the original strategy (Gregory).
5-DISPUTE RESOLUTION
Occurring in disputes, between the workers/unions and businesses/companies/firms, is natural. These disputes could be various natures, and they may require a particular method for their resolution. Most of the disputes, which occur between labor/union and companies, are related 1) wages, 2) health benefits, 3) working hours and 4) work environment. All these mentioned subjects are of high relevance for both company and union. Nominal wages, for instance, increase the ability, of an individual worker, to buy more goods and services, in a particular period. It suggests that when nominal wage increases, an employee/worker/laborer can buy more goods or it can save a portion of its salary, in the small or the brief period. In a different scenario, when wages drop, a worker/employee has to buy fewer goods and services or the minor portion of the income can be saved.
For the employee, an increase in nominal wages increases the cost of production, which may have multiple consequences; 1) lower profits and 2) eroding of competitive advantage. It is why an increase or decrease in wage is a sensitive issue, and mostly it turns into a dispute between the company and employees/union/workers.
When two parties fail to resolve their disputes, of any type or nature, one or both parties move the court for the settlement of the dispute. The United States’ juridical system is very efficient, and it produces results or concludes matters in a very brief period. However, litigation is a long battle, and it benefits that party, which can wait and because of its litigation, which matters are not being affected severely because of litigation. Also, the process is very cumbersome, and it does not only consume enormous time, but also it consumes financial resources, making it less attractive option.
For these reasons, the Alternative Dispute Resolution institution has grown significantly. Alternative Dispute Resolution is defined as such system or arbitration, which is not public judicial or administrative process. In fact, it is a substitute for public judicial and administrative processes, which are a less attractive option because of the time and financial resources they require to settle a dispute. In the context of the United States, these are private processes, in which the disputants 1) select, 2) hire and 3) pay the arbitrator or the third party. It shares the financial burden of the process, and the disputed can be resolved in a timely fashion (Pon Staff).
Unions and companies must acknowledge that whether it is a conventional process of dispute resolution or alternative/contemporary process, both processes are time and finance consuming. Also, disruptions, because of a dispute can cause severe financial losses to firm, company, or organization, which also affects employees. Therefore, intra-organizational institutions must be developed to address the issues so that they cannot evolve into dispute. It will require a better understanding of each other’s position and willingness to address and resolve issues in such manner that efficiency and productivity increases. Many organizations and unions have developed mechanisms and instruments to address issues so that they may avoid any disruption in operating and ultimate objectives can be met smoothly (Gunn).
6-INTERNATIONAL INDUSTRIAL RELATIONS
Globalization is a result of increased trade, which allowed countries to adopt the liberal economic model. This model emphasizes on free trade or minimum trade barriers, which may allow companies, from different economies and corporate systems, to sell their products in foreign markets, which are lucrative. These new realities not only aided in the formation of multinational companies, but it has also internationalized unions. It is evident that economic activity and realities of a particular country also impact the economies of other countries.
For instance, the Chinese economy is labor intensive economy, which allows it to manufacture products or goods at lower cost. When these products or goods penetrate American markets, they force the companies to become more competitive and innovative. It also pushes nominal wages downwards, which is yielding various kinds of challenges for workers or employees. Those companies, which cannot evolve or innovate, they shift their operations to such economies, where the cost of production is low, Many United States companies have moved their operations to Mexico and China, where the cost of production is low.
To counter these challenges, unions have also internationalized, and now they are actively impacting national disputes. This new reality, in which international unions are impacting, deliberately, public disputes, is highly controversial and subject of considerable interest. Many economists assert that internationalization, industries, and unions, is natural and one of the consequences of globalization.
However, they also assert that multinational enterprises, such as McDonald’s and General Motors, have a played a crucial role in the internationalization of these unions. For instance, workers of a multinational enterprise can now boycott work in different parts of the world, where an enterprise is operating. Workers, of saying McDonald’s, can hold a strike in South Asia, Europe, and America, simultaneously, which will cost a lot to an enterprise. It gives great relevance to international unions, which can disrupt operations in multiple regions of the world.
Studies also reveal that international trade unions see themselves as arbitrators, which causes various kinds of complications and which complex the international industrial relations. However, currently, these international unions refrain from addressing sensitive subjects, such as wages, as it is very indigenous and local issue. However, these international trade unions take measures to increase the leverage of local unions, which puts multinational companies under tremendous pressure. As this new reality and framework are forming; therefore, it is early to predict or project future of Global Industrial Relations (Fashoyin).
However, it is apparent that globalization will increase the relevance and role of international unions and they will be able to exert various kinds of influences of local unions and international enterprises. In addition to that International Industrial Relations will impact organizational structure and also practices to manage the human resource. Industrial experiences will be shared on both industrial and firm levels, which will increase the efficiency and productivity of firms. However, it will mostly depend upon the structure of corporate and industry, in which a firm operates. In some corporate and economic systems, there is a high symmetry of information and spill-over effect, both vertical and horizontal, takes less time (Croucher 952).
Work Cited
Cox, Jeff. “Disorganized: Union membership hit an all-time low in 2016.” CNBC. CNBC, 2017 January 2016. Web. 14 December 2017. https://www.cnbc.com/2017/01/26/disorganized-union-membership-hit-an-all-time-low-in-2016.html.
Croucher, Richard. “National and international labour relations in oil and gas Trans National Corporations in Kazakhstan.” International Business Review 24.6 (2015): 948-954.
Davidson, Paul. “Decline of unions has hurt all workers: study.” USA Today. USA Today,30 August 2016. Web. 14 December 2017. https://www.usatoday.com/story/money/2016/08/30/decline-unions-has-hurt-all-workers-study/89557266/.
Fashoyin, Tayo. “Changing international industrial relations: a summary.” Free Patents Online. Free Patents Online, 14 May 2016. Web. 15 December 2017. http://www.freepatentsonline.com/article/Indian-Journal-Industrial-Relations/228172468.html.
Gregory, Paul Roderick. “American Labor Unions: Underpaid, Overproductive Or Overpaid?” Forbes. Forbes, 12 July 2011. 15 December 2017. https://www.forbes.com/2011/07/08/labor-unions-economics.html#53ec66807480.
Gunn, Rochelle. “Alternative Dispute Resolution In A Work Setting.” Mediate. Resourceful internet Solutions, Inc., 1 January 2017. Web. 15 December 2017. https://www.mediate.com/articles/gunn.cfm.
Pon Staff. “What are the Three Basic Types of Dispute Resolution? What to Know About Mediation, Arbitration, and Litigation.” Program on Negotiation. Harvard Law School, 12 October 2017. Web. 15 December 2017. https://www.pon.harvard.edu/daily/dispute-resolution/what-are-the-three-basic-types-of-dispute-resolution-what-to-know-about-mediation-arbitration-and-litigation/.
Rasmus, Jack. “Concession Bargaining at the Crossroads.” Counter Punch. Counter Punch, 7 January 2014. Web. 15 December 2017. https://www.counterpunch.org/2014/01/07/concession-bargaining-at-the-crossroads/.
Sherk, James. “Expand Employee Participation in the Workplace.” Heritage. Heritage, 13 MArch 2014. Web. 15 December 2017. http://www.heritage.org/jobs-and-labor/report/expand-employee-participation-the-workplace.
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