Employee Relation - the Role Trade Unions and Employee Representatives - Essay Example

Employee Relation

Introduction

If one takes a close look at the social environment, one will be able to see that it should be regarded as an irreplaceable prerequisite for the development of the inner potential of a human being. However, one would make no mistake that this positive influence can only be achieved if no part of the population is disadvantaged. The issue of poverty is often regarded as one of the major challenges that the state should tackle and the common solution for it is to introduce a minimum wage. Nevertheless, the latter may not be sufficient to satisfy all the needs of the people. This paper will analyse Living Wage initiative, focusing on the implications of its adaptation for SMEs, the role that trade unions play as well as involving several theoretical perspectives to understand the issue.

Implications for SMEs

If employers decide to adopt Living Wage initiative, then this action will have some serious implications for them. First of all, one can hardly deny that paying more than required will become a significant financial burden for the organisation. Consider the following: the Living Wage Foundation requires the employers to pay £9.40 instead of £6.70 in London. Some might suggest that the difference of £2.70 is not big, but when one multiplies it by eight (a daily wage), then by five (a weekly wage), and finally by four (a monthly age), one will end up with extra £432 per person. It is obvious that enterprises might employ a different number of people; so, suppose there are 10 employees and this number will increase to £4320. Therefore, a simple desire to follow the initiative that seems to be fair will cost employer additional money and that is something that should be properly considered.

Secondly, one should keep in mind that if SMEs adopt this approach, the financial operations within the organisation will become more complex. Smith and Baker (2010) note that National Minimum Wage Act 1998 which is the fundamental piece of legislation that shapes this part of employment relations calls for annual recalculation of the minimum wage. In other words, the people who work in HR department and Finance department will have to design compensation plans every year so that they will be in line with the growing minimum wage. This was contrary to the situation when an employer would set the wage at a reasonably moderate level and check from time to time whether it does not belong the national minimum wage.

Finally, SMEs should understand one simple fact: they will not be praised by the government in any way if they pay more than they are required to. In other words, the law stipulates that the employer pays at least the minimum wage and how much is the difference between what is actually paid and what is supposed to be paid is not important. This means that claiming a commitment to Living wage foundation may have a positive impact on one's public image, but, legally speaking, this will not be a right strategic move since it will result in using the excessive amount of resources in situations when there was not a direct requirement. However, the evidence shows that many successful companies believe that reinforcement of the public image can be a valuable investment: consider the fact that such famous organisations as Barclays, Burberry, GSK, and Unilever UK joined the Living Wage Foundation initiative.

The role trade unions and employee representatives

The discussion of the topic would not be full if the consideration of the role of trade unions as well as other employee representatives is omitted. To begin with, it is quite obvious that these parties will be active proponents of the spread of adoption of Living Wage. One would make no mistake suggesting that the latter holds more benefits for the employees than for the employers. Keeping in mind that the ultimate goal of trade unions is to make sure that the working conditions are at least satisfactory, their support of Living Wage is logical and is something that will be expected from them during the negotiations.

Moreover, the role of these organisations may be manifested in that they will be able to voice the concerns and the needs of the employees. Indeed, one of the primary functions of trade unions is to facilitate negotiations since it is a lot easier to negotiate with a relatively small group of people rather than with the entire staff. Therefore, one should note that employee representatives will be responsible for outlining what the staff wants and needs to that this information will become the foundation of further changes. Indeed, the employers may not see the reason why the minimum wage should be increased and may dismiss the demands for it; however, if they understand why this will have a positive impact on the staff and, simply put, when people are going to do with this money, they will be more likely to accept the new terms.

Lastly, the role of trade unions and employee representatives may be interpreted as the litmus test when it comes to negotiations. It is quite natural that one side, namely the employer, will try to make the minimum wage as small as possible while the other side, namely the employees, will do their best to increase it. So, if the former makes some concessions and they do not satisfy the latter, this might be seen as the sign of lack of trying. For example, if the minimum wage is increased by half a pound that this can hardly be seen as an increase. So, the employers should watch the reaction of trade unions closely since this will be an indication of the success of the negotiations.

Theoretical perspectives

There is a number of theoretical perspectives that can be engaged while considering the issues concerning the minimum wage legislation and the Living Wage initiative. First of all, as mentioned by Montana & Charnov (2008), the concept of living wage may be interpreted well within the framework of Hierarchy of Needs. Indeed, it is obvious that people mostly use the money to satisfy their physiological (buy food) and safety (buy a house or pay rent) needs. That is why if an employer increases the amount of money that a person received an a monthly basis, the former makes sure that the first two levels of needs are properly taken care of. In other words, low order needs will no longer bother the employee and the latter will be able to show outstanding performance.

A similar approach can be illustrated by Herzberg's two-factor theory. Griffin (2007) notes that it is the responsibility of the employers to make sure that all hygiene factors are present so that the motivators will be able to have their positive influence. What is more important is that the absence of hygiene factors leads to dissatisfaction which is something that every employer is willing to avoid. Since compensation is one of the factors which are referred to as hygiene ones, it is obvious that low minimum wage will result in dissatisfaction. This means that the adoption of Living Wage initiative may also have a positive impact on other areas of employment, allowing the employees to work harder and achieve better results since the balance between work and life will be achieved.

Finally, speaking of the concerns that the applicable legislation brings up, one should note that there are several theoretical perspective that focus on distributive justice and entitlement that might be engaged. For example, Nozick (2013) developed his entitlement theory which would see Living Wage initiative as a manifestation of the principle of rectification of injustice. However, this person will argue that it is perfectly normal to have individuals who rely on the minimum age as their major source of income and individuals who earn so much that those in poverty cannot even imagine. Rawls (2009) would point out that the adoption of Living Wage initiative would be a kind of inequality that benefits the disadvantaged; therefore, it should be accepted. Marx and Engels (2005) will suggest that the final goal of the economic system should be the achievement of equality; therefore, the introduction of Living Wage should be coupled with reducing the income of some extremely wealthy individuals.

Conclusion

Having examined all the points which were mentioned in the paragraphs above, one is able to come to the following conclusion: the initiative which was presented by Living Wage Foundation should be praised because it strives to ensure that people who work will be able to avoid poverty. It is obvious that there are implications that SMEs should consider before adopting it, such as the subsequent financial burden, the complexity of compensation schemes, and lack of reward. Moreover, trade unions and employee representatives will play an important role in the negotiations, being active proponents of the changes, voicing the concerns and the needs. Finally, there are several theoretical perspectives that may be engaged such as Hierarchy of needs, Two-factor theory and different approaches to the concept of entitlement.