Monday, July 4, 2011

What are the advantages and disadvantages for management and employees from recognizing a union for the purposes of collective bargaining?

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Definition of collective bargaining

“ Employees do not negotiate individually and on their own behalf, but do so collectively though representative.” ( The Donovan Commission, 168).

Collective bargaining can be defined as an arrangement for settling wages and conditions of employment by an agreement between an employer, and an association of employees. It has been regarded traditionally e.g. by Webbs (10), as the collective alternative to individual bargaining.

“It is not an act of exchange itself but, rather a rule making process designed to control the terms of employment contracts.” ( Flanders, 168)

Buy What are the advantages and disadvantages for management and employees from recognizing a union for the purposes of collective bargaining? term paper

Chamberlain (151) consider that collective bargaining fulfills three functions

• a means of contracting for the sale of labour

• a form of industrial government

• a method of management

The collective bargaining process can be viewed by three different perspectives which are not necessarily conflicting its other and each of these perspectives represents a different stage in bargaining process.

The first one is that collective bargaining regulates the sale of labour. This is the marketing concept of collective bargaining and is concerned with the labour with is bought and sold in the market place. In other words it takes into account the terms and condition under which is labour bought e.g. working hours and working conditions. It is more a economic approach to the nature of collective bargaining and shows the exchange relationships between employers and employees.

By the second perspective collective bargaining is viewed as a form of industrial government. This is the governmental concept of collective bargaining. In this case is seen as a political power relationship. It determines the relations between management and trade union representatives and finds solutions by modifying the terms of collective agreements when necessary. As a governmental concept collective bargaining is focused on the continuity of management union relationship and the continuous process of rule making which takes place between the two groups.

The third and the last perspective is the industrial relation or managerial relations concept of collective bargaining. Here it is just a simple system of industrial relations where management and unions have equal than competing interests.

As collective bargaining between employees and trade unions matures we have a progress from the first perspective to the second one and finally to the last one. The nature and depth of collective bargaining differs not only between different negotiating parties but also within the same negotiating groups in different time. The essence of the collective bargaining process is its representative nature, its power basis, its adaptability, and its flexibility to particular circumstances. (1)

The objective of collective bargaining is a collective agreement between the union and the employer. This agreement governs wages and benefits for the employees it cover for a fixed period of time. This fixed term collective agreement provides a period of labour peace. Strikes and lock-outs are allowed only when a collective agreement has expired, and then only after the collective agreement process has taken place.

Such an agreement requires that workers are involved in the settlement of wages and conditions as a group and implies, therefore, that they are organized and represented by a trade union which has obtained the right to negotiate on behalf of its members. It is necessary also that some recognized procedure for negotiation has been established. These conditions are necessary in order have the existence of collective bargaining.

Collective bargaining allows freedom of association and exists in all industrialized countries. However it varies between different countries or even between different organizations in the same country, and it evolves over the time.

The result of collective bargaining process are the collective agreements. There are two types of such agreements, the procedural and the substantive.

Procedural agreements regulate the relations between employers and employees, define the bargaining units and determine the status and facilities for trade union representatives in the bargaining process.

Substantive agreements on the other hand, are concerned with the definition of jobs, the wage of employees and the conditions under which they work.

Collective bargaining agreements contain the current detailed settlements of wages and conditions together with a specification of the procedures to be taken in the event of any dispute. It is not only entails reaching an agreement on terms, but also extends to their subsequent interpretation and administration in the day to day relationship of the parties involved.

As far as, trade unions are recognized by employers for the purposes of collective bargaining, unions are trying by negotiating with employers on behalf of their members to secure job for employees, and to achieve formal or informal acceptance of the arrangements for redundancy and worksharing. There are also trying to improve the working hours and the pay system during holidays. Lately the working hours per week have been reduced. Another main objective of unions negotiations is to improve the working conditions in order employees to avoid working accidents by persuading employers and government to provide to employees the right job equipment e.g. protective clothes. ()

The collective bargaining is a process of resolving the conflicting desires of employers and unions.

In case of a disagreement between the two parties we may have strikes, lock-outs or some other sanctions not only from employees but from employers as well (e.g. lock-outs, threats of liquidation e.t.c.). Each of the two parties have their own weapons against a possible disagreement or in order to threat the other party.

The costs of a disagreement for the employer are the loss of profits during a dispute or even the loss of consumers goodwill by not be able to respond to order dates. On the other hand employees are loosing their income by participating in trade union sanctions. This has as a result employees not to be able to meet their future financial commitments.

The cost of agreement to each party is the difference between its future income, flow on its own, and on its opponent’s terms. Neither the employer nor the union necessarily exert their full bargaining power but may hold potential gains in reserve for the future.()

Collective bargaining has its own structure which is the structure of any stable bargaining agreements. This structure includes the bargaining units, bargaining levels, bargaining form and the bargaining scope.

The bargaining units are the members which take part in the collective bargaining which are employers or management on one hand and employees and trade unions on the other.

The bargaining levels is about the levels in which bargaining takes place. These levels are the multi-employer or single employer bargaining which is subdivided to centralized and decentalized bargaining. These are different methods which are used by employers according to different circumstances.

The bargaining form is concerned with the formality or informality of the bargaining process, if it is written or unwritten respectively.

Finally the bargaining scope is about the subjects of negotiations between the two parties, what desires are going to be negotiated between management and trade unions.(4)

Different structures of collective bargaining have different drawbacks to each or the two parties, it depends on the certain time that collective bargaining is taken place which structure is going to be implemented, and how it is going to be formed. The structure varies also according to the demands of each party and the conditions under which bargaining takes place.

By the recognition of trade unions by employers for collective bargaining purposes there are many impacts on employers-management and trade unions-employees respectively. The relationship between these two parties is based on the bargaining power that each party enjoys. For that reason if there is not a reasonable power between the two sides, the one with the greater power will be able to impose its policies and demands on the other side. This means that employers or employees may ultimately impose sanctions on their weaker opponent. The most usual sanctions are strike, lock-outs, threats of removal the plant and machinery, withdrawing of overtime or mass suspension, stoppages e.t.c.

In order to examine the impacts of collective bargaining we must first classify it into ‘multi-employer bargaining’ and ‘single employer bargaining. Single employer bargaining can be subdivided into centralized and decentralized bargaining.

Multi-employer bargaining is where a number of employers can reach an industry-wide or national agreement on pay and conditions with the recognized unions in the industry as a whole.

With decentralized bargaining, enterprises may have full delegated authority to settle pay claims and other conditions of employment.

Employer adopt their own strategy concerned with bargaining levels in order to deal with trade union. It depends on the certain time and different conditions under which bargaining is taken place and can even change their bargaining levels between different times of negotiation.

Each one of the different classifications has its own drawbacks to both sides. With ‘multi-employer’ bargaining employers are having the best use of their negotiating resources. However as management remains in certain establishment levels it is easier for management to concentrate on managing the business effectively. They can also treat employees equitably and they are preventing pay ‘leap-frogging’ by the unions. There are also certain disadvantages like the reduction of the opportunity to negotiate domestic deals to cope with local labour market conditions. A second one is that employers are paying something for nothing to all employees, thus requiring changes in working practices and productivity to be negotiated locally. Finally some employers have to pay more than they can afford because of their business condition.

On the other hand the advantages for trade unions are that ‘multi-employer’ concentrates on unions bargaining power and negotiating skills, all employees get something and the unions role is established and legislated throughout the industry. In contrast to these benefits their ability to negotiate more important and beneficial desires is reduced locally and the maintenance of close day-to-day relationships at company level is not needed.

As far as the centralized bargaining is concerned employers have uniform terms and conditions within the company. Its is easier to estimate labour costs and the relationship between the negotiating parties is more stable. They have also cheaper parity claims. Its major disadvantages are that the conflicting demands are derived from diverse product markets like labour markets and technology. There is also a formalization of collective agreements, the communication becomes harder and it is difficult to monitor workplace arrangements effectively.

For the trade union centralized bargaining provides more effective and efficient use of union resources and negotiating skills and better coordination between bargaining groups. However the status and power of shop stewards is weaker and it creates tensions in decentralized unions, such as in the engineering workers union, where considerable autonomy is vested locally.

Finally with decentralized bargaining managers have better managerial authority for industrial relations and they have also improved lines of communication with helps them to find faster solution in order to face potential disputes. Another advantage is that management is more possible to achieve a flexible approach to workplace change, and the shop steward power is consolidated so there are better communication lines for intraplant employees. The disadvantages of decentrralized bargaining are that claims for pay parity rise between different workplaces and negotiating groups because of the need to monitor of labour cost control becomes more difficult and complicated.(5)

As a conclusion we see that collective bargaining is the method by which employers on one hand and trade unions on the other are trying to negotiate. Trade unions act on behalf of their members which are the employees. The negotiations subject is about employees and the improvement of their wage and conditions of work.

Collective bargaining is a flexible process and can be applied and adopted to wide variety of contexts, where the parties want this. It is influenced by many factors like the state of economy, managerial relations, public and legal policy, the bargaining power of employers or employees e.t.c. For that reason it is not stable and varies according to the certain conditions under which is impemented.

Collective bargaining is more likely to exist in Public sector rather than in Private and in manual workers rather than in non-manual. It depends also on the kind of business, for example it is more likely used by manufacturing companies. Its existence depends very much on employers as they have to recognize a trade union and they also form the different classifications of collective bargaining.


Trade unions & wages by Brian Burkitt

Understanding industrial relations by David Farnham and John Pimlott fifth edition

Internal wage structure by J.L.Meij

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