Impact of Financial Crisis on the Role of the Labor Union Movement in the US - Essay Example

?Introduction Labor Unions play critical part in ensuring overall industrial peace in any firm while working as the collective bargaining agent for the labor and employees of the firm. Legally assigned the role of collective bargaining agents, labor unions play important role in ensuring that the relationship between the labor and the management/owners remain cordial and in the best interests of the organization. In US, most of the labor unions currently exist in the public sector organizations such as education and Police. This fact alone suggests that the overall influence of the labor unions in the private sector is currently on decline. The current economic recession in US and other developed countries of the world has resulted into sharp decline in employment level. As such firms are cutting jobs in order to become more competitive and save costs. Rising unemployment therefore has also resulted into the lack of new memberships for the labor unions thus effectively reducing their influence within the organizations. It is also important to note that sharp decline in the output and lack of demand is resulting into lower output produced by the firms. Government, as a result of its massive injection of money into the system is also looking for ways to further streamline and rationalize its expenses. In such situation, the overall role and influence of labor unions may not be as effective as it may seem in the past. This paper will discuss and argue how current economic situation has impacted the labor unions. Labor Union Movement and Current Economic Situation Labor unions act as the collective bargaining agents for the labor working in different firms including public sector departments and enterprises. Labor union therefore is considered as an organization of workers wherein workers collectively strive to achieve some common goals such as better pay, improved working conditions and other benefits. The collective bargaining agent role of the labor unions therefore outlines that labor unions have the explicit right to enter into negotiations with the management of the firm to make mutual decisions in order to safeguard the interests of the workers. Over the period of time, there has been an intense criticism on the role of unions in the economy and their overall impact on the wages and number of jobs. It is generally agreed that due to union partnership, wages are often driven up and those who are members of the labor unions tend to benefit more from the labor unions as compared to the workers who are not the members of the unions. Due to higher wages, the overall costs are increased and countries lose their overall competitiveness and hence jobs relocate to regions like Asia to provide low cost labor services. The current economic situation is also a glaring example of how higher wages and costs associated with the unions can actually increase the cost for the firms and hence make them less competitive as compared to other countries with little or no union activity. The resources of the firms are already under stress and higher costs therefore can further increase the costs. It is pertinent to note that trade union movement, at the global level, has also transcended itself into a much bigger role. During the initial phase of the current economic recession, global leaders of the different labor unions actively coordinated with G20 countries to bail out the global economy. This active participation into the overall policy making process therefore suggest that with the advent of the current global crisis, trade unions have also evolved the much bigger role for themselves including the element of policy making. (Russell) There is also a growing demand from different other quarters to suggest that labor unions must play an active part in resolving the economic crisis. As such emphasis has been laid on the role of labor unions as the facilitators of the management in overcoming the economic crisis. This new role of the labor unions therefore suggest that at least in US, the overall role of labor unions is being redefined. It is also important to note that labor unions in countries like UK have reacted in different manner as compared to the labor unions in US. Labor unions in British Airways as well as in Police and Firefighting departments have acted reactively to the efforts undertaken to further cut down the costs and improve the overall financial position of these organizations. This also means that the labor unions have actually resisted different changes undertaken to cope with the overall impact of the economic crisis. IMF in one of its surveys has also mentioned that economic crisis is resulting into a negative demand for the labor. As such the fiscal stimulus plans offered by the government need to be focused on those who are most vulnerable to the overall impacts of the economic situation. This assessment suggests that the labor unions may be at the receiving end due to the lack of demand for the labor despite the fact that there is an abundant supply of labor available in the market. (Willson) There have been efforts in some States of US, wherein due to high cost paid to unionized public employees that the union activity in public organizations should be banned in order to overcome the financial crisis. (Tyson). This suggests that underlying the financial crisis, there is a huge cry over curtailing the union activity in order to avoid further damage to the pubic as well as private institutions. Conclusion The above discussion therefore suggests that labor union movement has been affected both in the positive as well as in the negative manner. On macro-economic level, labor unions have become more participative in the policy making process wherein they have undertaken much bigger and constructive role. On the other hand, due to low aggregate demand, there is a lack demand for the labor and efforts are being made to further curtail the powers of the unions in order to rationalize the costs. Since unionized employees tend to become more costly for the firms therefore focus is on reducing the powers of unions. Bibliography Russell, Jason. "Response of the US Labour Movement to the Economic Crisis." 2010. Labor University. 30 May 2011 . Tyson, Bruce. "Chaos erupts in Wisconsin over bid to contain public labor unions." 18 Feb 2011. Helium. 30 May 2011 . Willson, Simon. "Economic Crises Hit Workers Hardest, Labor Conference Told." 16 January 2009. IMF. 31 May 2011 . Read More