Why is the employment relations system in the USA characterised by low levels of collective bargaining - Essay Example

?Why Is the Employment Relations System in the USA Characterized by Low Levels of Collective Bargaining? An employee relation system involves maintaining and managing the employees in the organization and maintaining good relationship with them. It mainly includes resolving the problems of the individuals, which arise within the organization and are related to work. Every country have specific norms and labour policies based on which the framework of the employee relation system is designed. In USA there are three basic laws with regard to the employee relationship. They are: a) National Labour Relation Act, which is also known as the Wagner Act, b) Labour Management Relation Act, also called the Taft-Hartley Act, and c) Disclosure Act, which is called the Landrum Griffin Act. The Federal authorities throughout USA make sure that these three laws are implemented in organizations. The agency responsible for its enforcement is the National Labour Relation Board (NLRB). It is into labour management and relation assessment. The Department of Labour (DOL) is responsible for the enforcement of the other important aspects in labour relationship management laws. The major requirement for doing such activity is to ensure the democracy of the internal union and the financial accountability. Both of these regulatory bodies are responsible for ascertaining that the laws are strictly followed and organizations are working under the assistance of these stated frameworks. The private sector workforce or employees have laws set for them under the federal labour laws of the two regulatory bodies such as DOL and NLRB. It has been stated in the Commerce Clause that these regulatory bodies even have regulatory authority to control the labour or employee relations in the privately owned companies (Cahuc and Zylberberg, 2004, pp. 371–373). Traditionally, the unions were formed by skilled craftsmen to safeguard their interest in the organization. With the advent of scientific management in the organizations and industries, the rationale for collectively acting to bargain for the disbursement and working conditions among the workers increased. However, the capitalists in those times were extremely powerful and they opposed the union movement. The anti-union employment laws were even floated by them so as to dishevel the union movement of the craftsmen. However, during the Great Depression of 1930s, the factory workers united and started forming unions. It was during this time when these unions were successful in performing many activities such as the Wagner Act of 1935, which gave the employees or workers the right to plan and organize strikes. In 1940–1950, the unions began to grow though the federal legislation controlled and monitored them from time to time. In 1960 and 1970, the unionization in the public sector increased considerably (Harcourt and Wood, 2006, pp. 141–145). The regulatory bodies in US affect the industrial and employee relation system in many ways such as: They provide the terms and conditions of the employment in details and directly. They regulate the way in which the organized labour or employees and the management are related to one another. The regulatory bodies had ascertained the minimum wage rate and the maximum working hours for the workers. The overtime rates were also ascertained by the federal and state bodies. The concept of “employment at will” operates in US. This means that the employer would have to show no specific reason for dismissing any employee. In this scenario, the National Labour Relation Act was introduced, which provided a specific structure of policies for employee rights in relation to the collective actions. A few of the regulations also required union certification through secret ballot (OECD, 1997, pp. 86–87). In 2007, the union density in US was about 36 percent. Among this about 7.5 percent was in the private sector and the rest in the public sector. It is said that the US unions have a unique approach because they provide benefits mainly to the existing employees or members. The focus of American unions has always been on collective bargaining and strike threat. They do not have a political labour party, but financial aid from the political parties is frequently given to the labour unions voluntarily. The public sector of USA is heavily unionized. The national union is the most powerful because they control the strikes, control the strategies and also establish or disestablish the local unions (Gautie and Schmitt, 2010, p. 435). After having a brief overview and historical aspect of the employment relation system in USA, it was understood that as the global business environment is changing, organizations and regulatory bodies are redefining and restructuring the norms and policies for assisting the trade unions to establish sustainability, rather than just opposing them as it was done historically. This study aims at understanding the significance and implication of collective bargaining in the trade unions employee relation. This would assist in understanding the reason behind the low levels of collective bargaining in USA in the employee relation system. The process of making decisions between the employer and the union or parties is called collective bargaining. Collective bargaining means that the employees collectively with the help of the trade unions discuss with the employer their probable rights and requirements. The process of bargaining ascertains which demands are acceded to and which are rejected by the employer or the management of the company. The bargaining might take place in many forms, namely: a) in between the employer and the trade union and b) in between the group of employers and the union federations. This collective bargaining process takes place at different levels based on the demands or issues held for bargaining. The characteristics of the collective bargaining structure in the employee relation system of USA have been discussed. The agreements of collective bargaining cover about 15 percent of the labour force of USA, but it mainly includes the larger organizations or establishments. Traditionally in 1988, about 19.4 percent of employees were included in this agreement, in comparison to the 5.2 percent of employees in the private sector. This also stated a fact that the small establishment did not receive the benefit of collective bargaining in US. The trade unions played a significant role in the collective bargaining agreements as they were the ones which were responsible for the application and negotiations for the employees with the employers. The trade unions under the employee relation system only had the task of negotiating and ensuring that the agreements stated were fulfilled. The National Labour Relation Act (1935) mainly covers the collective bargaining agreements. In US the collective bargaining agreement under the stated act prohibits the employer to spy, discriminate, or terminate the employee just because the employee is a union member. On the other hand, it is also an illegal act to force an employee to join the union for employment in the organization. So the concept of collective bargaining includes the consent and vote of a majority of union representatives and the employees committee while negotiating the contracts with regard to wages, working hours, and other conditions of the employment. In about 28 states of USA, it is a rule that they have to contribute towards the cost of representing the union if their fellow workers or employees are in negotiation with the management. They usually vary between 1 and 2 percent (OECD, n. d., pp. 168–170). It is not that only the employees are benefited from the collective bargaining agreements but the employers or the management of the company also gets a lot of advantages after collective bargaining and trade union systems were introduced in the employee relation system of USA. The employer can easily resolve the major issues at the organizational level rather than unnecessarily dragging it to the court. It reduces the complexities on the part of the management and also minimizes the cost of the company (Gennard and Judge, 2005, pp. 220–221). Collective bargaining promotes a sense of security not only among the employees for their job but also for the employer for the smooth functioning of the company. It plays a significant role in settling industrial disputes. Moreover, democracy among the workers can be ensured and workers also find a suitable and efficient working environment. After analyzing the inception of unions and workers association of USA and studying the significance and advent of collective bargaining in the employee relation system in USA, we would shed light on a vital fact associated with levels of collective bargaining in USA. It has been noticed since the historic times that the levels of collective bargaining in the employee relation system is quite low in USA compared to other countries. The empirical literature centers around three quantifiable characteristics of collective bargaining, namely: a) union density, b) bargaining co-ordination, and c) bargaining coverage. The union density describes the number of workers that participated in the union activities and were members of the trade union, compared to the non-unionized workers. Similarly, bargaining coverage was to express the number of workers whose wage rate and working hours were the result of collective bargaining agreements. Bargaining coverage included the significance of the collective bargaining agreement in comparison to individual contracts. Figure 1 shows that US had a union density of 23 in 1970s, which is the lowest among the major countries involved in trade union movements. Figure 1 shows the bargaining coverage and union density of 19 OECD countries (Hayter, 2011, pp. 239–244). Figure 1 Source: (Aidt and Tzannatos, 2008, p. 266) This figure went on decreasing to 13 in 2000s. A similar trend can be seen in the bargaining coverage of USA, as it was 26 in 1980s, and went on reducing to 14 in 2000s. This signifies that it is much lower than in countries such as Germany or Austria, which is about 68 percent and 98 percent respectively. There are two major reasons to describe the low level of collective bargaining in the employee relation system of USA. They are: a) ideology and b) law. The culture of individualism is deeply rooted in the American culture. The rights of individuals are given primary importance than the other things such as any collective activity. This ideology hinders the participation of the employees in collective bargaining practices. So the terms and conditions of employment are generally negotiated in USA on an individual basis between the employer and the employee. However, the employers are enthusiastic in introducing or encouraging collective bargaining because it would reduce their responsibility and work load to an extent and also would assist them in solving employee issues faster and easier. However, according to the law, the majority of employees have to vote in order to establish collective bargaining agreements at firm levels, and this is hard to achieve (Beaumont, 1992, p. 100). The empirical evidence states that US has a low level of collective bargaining because here the bargaining at an individual level is highly prepared. Detailed terms of employment are negotiated for and the unions here do not negotiate for national wage. Moreover, the employers also take decisions related to payment and working hours etc at an individual level. Unity or unified culture does not prevail in the American society. A country’s traditional culture strongly supports trade unionization and collective bargaining because collective bargaining provides a sense of security to the employees. Countries such as Austria, Australia, Denmark, Belgium, etc have a high union density and bargaining coverage compared to USA. Collective bargaining is not only important for negotiation of rights with the employer but also assists in maintaining stability within the industry, which further supports the business environment of the country (OECD, 2008, p. 82). In situations such as now, when the economic slowdown has engulfed USA, collective bargaining would have saved many employments and losses because unionization and bargaining scan the activities of employers too, so any step from the employer’s side which would adversely affect the employees would have been detected and discussed. Many downsizing decisions taken during this period were unnecessary and were just made to follow the trend. These issues related to human resource within the organization are actively sorted out by the trade union members with the employers. However, the low level of union penetration and minimal usage of collective bargaining reveal an adverse effect. The law is a boon but, in case of USA, has become a curse because unless the majority of employees vote in favour of unionization and give their approval for collective bargaining, the employer cannot consent to unionization in the organization either. References Aidt, T. S. and Tzannatos, Z., 2008. Trade unions, collective bargaining and macroeconomic performance: a review. Industrial Relations Journal, [online] 39(4), pp. 258–295. Beaumont, P. B., 1992. Public sector industrial relations. New York: Routledge. Cahuc, P. A. and Zylberberg, A., 2004. Labour economics. Massachusetts: MIT Press. Gautie, J. and Schmitt, J., 2010. Low-wage work in the wealthy world. New York: Russell Sage Foundation. Gennard, J. and Judge, G., 2005. Employee relations. 4th ed. London: CIPD Publishing. Harcourt, M. and Wood, G., 2006. Trade unions and democracy: strategies and perspectives. Manchester: Transaction Publishers. Hayter, S., 2011. The role of collective bargaining in the global economy: negotiating for social justice. Massachusetts: Edward Elgar Publishing. OECD, 1997. OECD employment outlook. Paris: OECD Publishing. OECD, 2008. OECD glossary of statistical terms 2008. Paris: OECD Publishing. OECD, no date. Collective bargaining: levels and coverage. 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