Understanding The Genesis of The Negotiation Process Between Employer and Employees

Collective Bargaining

"There's strength in numbers" This is a cliché, or could even be called a proverb that most of us have heard at some stage in our lives. This is what lies at the heart of collective bargaining, and it provides a reasonable reason for the use of collective bargaining. It also gives us an indication of where and for whom it is most useful. The origins of Collective Bargaining lie in one of man's primary instincts; defense. In an industrial relations context this is defense of proper working conditions, secure employment and proper pay. Collective bargaining allowed this by gaining pay increases through the increased power of the workers as a joint force.

But what exactly is collective bargaining? The answer to that depends on ones viewpoint. What are the social benefits of collective bargaining? And whom do these benefits affect? I see collective bargaining, in its most basic form, as the process by which an organized group of employees, in the form of trade unions, negotiate with employers, their representatives or their associations in relation to any aspect of employment within the employer’s organization. The reason that collective bargaining and trade unions are used is the reason cited in the first paragraph; "There's strength in numbers". The individual threat, to the firm, by a single employee to withhold labor is not very great. But when the majority of a workforce in an organization threaten to strike, or threaten any other form of industrial action this threat becomes altogether more substantial. Collective bargaining gives redress to the imbalance of power between individual workers and employers. This is the main purpose that collective bargaining is used in labor relations, and essentially gives collective bargaining a political purpose; the equalization of power. Once this extra power is attained, collective bargaining is then used for primarily economic purposes. It is only in recent times that social issues have been included in the negotiations in collective bargaining. As this process tends to lead to equal pay for all workers doing the same work, there is as a consequence a social benefit; equality amongst the workforce. This has its downside. When there is little incentive to exceed the efforts of your fellow employees this can create problems. Specifically complacency among the employees, but this disadvantage has been partly eroded in recent times with the advent of productivity deals. Collective bargaining is also a political institution in that it regulates and defines the interaction between trade unions and management. In a social context, the consequence of this is a system for regulating industrial conflict. This can help ensure that any industrial conflict is kept within reasonable bounds, and that in most cases the more militant elements in trade unions are kept under control by virtue of the fact that the majority of the workforce see an alternative avenue of dealing with disputes. Trade unions are not the seeds of socialism as some contend but the spacer that allows both business and labor to participate equitably in the market. So how exactly does collective bargaining “oil the wheels of capitalism”? Collective bargaining provides management with a method for dealing with employees in an equitable way. If areas of common interest are maximized, and stressed in the collective bargaining process, this can reinforce an acceptance of common interest by the workforce. The process of collective bargaining also legitimizes trade unions within the company or employing organization. It has also been contended that this legitimacy can give trade union members a sense of belonging to the organization. Three things; the sense of equality, common interest and belonging to a group will make workers more content, minimize conflict and create a feeling of stability within the company. Collective bargaining, when agreements that come from it are for set time periods, can allow management to plan for the future based on those agreements and the knowledge that the unions are likely to cooperate. It is these reasons that it has been said that collective bargaining “oils the wheels of a capitalist society”. Whether or not this is good depends on your viewpoint. I personally see this as a very positive result of the collective bargaining process. The greatest disadvantages of collective bargaining in a capitalist society lie mainly in the financial arena. Collective bargaining in the form of wage rounds leads to both wage and grade drift. Wage drift leads to higher wage costs for employers and higher inflation within the economy, which in turn leads to higher interest rates and lower investment. Lower investment means that fewer jobs are created, unemployment rises, social welfare payments increase and a definite increase in the public expenditures. Following these consequences there would be less money in the economy overall in real terms. Grade drift is a problem for employers, which is linked to wage drift. Grade drift occurs where secure jobs are one of the trade unions aims in collective bargaining. As jobs become more automated with the advance of technology, employers are forced to keep staff to keep to previous agreements. As companies no longer need as many staff the workforce tends to get older, with rising wage costs and mainly static skill levels. This static skill level is what happens to secretaries quite often. They become the most efficient that they ever will be relatively early in their career. Then there seniority demands that their wage increase but their productivity does not. Then either the firm loses efficiency or the secretary loses their job.

After reading the literature on this subject I have a much higher opinion of unions and believe they can continue to be a positive part of the economy. In order to do this they must stay local and not become big centralized unions. Centralization puts to much power in the hands of the labor and reduces the overall efficiency of the work force.