Comparative Employment Law and Equitable Employment Opportunities - Essay Example

Comparative Employment Law Introduction A minimum wage is a figure set by the government on employee wages, either monthly or hourly for which employee wages are determined so long as the wages are above the figure set. The right of the employee to earn a decent living has been around for quite some time and historians can actually trace the first legal enactments regarding payments to labourers to 1349 under the Ordinance of Labourers decree set by King Edward III of medieval England. Modern minimum wage laws however started being enforced in New Zealand, which was a British colony, in 1894. Australia enacted a minimum wage law in 1896 whereas Great Britain enacted their first minimum wage law in 1909 (Stone, 2010). In the US, the law on statutory minimum wage came into effect in 1938 after which the United Kingdom adopted the principles of the United States legislation and redid their minimum wage law, which they enacted in 1998. Collective bargaining on the other hand is a process of negotiations undertaken between the employer and the employees through the employee’s labour unions. These negotiations are undertaken to ensure the employees receive fair remuneration and work in the right working conditions. The terms of negotiations binding and mostly focus on wages, working hours, conditions of work, safety and health of the employees and the capacity of the employer to meet these demands and needs. This study will focus on the different systems of collective bargaining and statutory minimum wage, focusing on the advantages and disadvantages of each system (Heasman, 2003, p. 175). Background In any sector, be it within the blue-collar workers or the white-collar workers, there are certain fundamental principles which gainful employment has to have. These principles guide employment regulations in every jurisdiction and they allow for an environment where every individual is rewarded justly for the input they put into their employment. The absence of a strict adherence to these principles results in skewed employment regulations and unjust working environments (Helmore, 2013, p. 2). Though the principles are not strict in every sense of the word, they provide a road map to which employment regulations ought to be measured. The strict adherence of these regulations on the other hand ensures the economy is injected with skilful workers driving its productivity and this is a sure recipe for a flourishing economy and society (Herman, 1985, p. 31; Saget, 2001, p. 26; and Ramesh, 2013, p. 1). These principles are: Equitable employment opportunities This principle denotes that every individual is entitled to fair and equal opportunities for employment and should not be subjected to unfair exclusions from employment opportunities. This does not mean that the prospective employee is to be considered for any position they fancy, but rather that the employee can be considered for any position whose tasks are within the skill set of the applicant (Willey et al., 2012, p. 43). In some societies there is the issue of job inequality whereby an individual from a certain section of the community does not get due recognition for a certain job, which is similarly done by an individual from another section of the community (Toynbee, 2003, p. 83). An example of this is seen in countries, which practice the caste system like in India, whereby prospective employees/applicants from a lower caste are not considered for a job, which another individual from a higher caste as applied. Equitable pay for job done The era of slavery is long gone. This is true in spite of the fact that some employees earn very little in spite of the immense contribution they make to the bottom line of the companies they work for. Some of these employment conditions are very much akin to slavery ergo the notion that perhaps slavery took different dimensions compared to racial superiority. There seems to be slavery of the poor, whereby with just little remuneration the worker is forced to work in inhumane conditions yielding millions of dollars for the employers whereas the workers remain poor. The focus for these unscrupulous employers is to pay the workers as little as possible to make them to be dependent on them and to pay just enough to ensure the workers do not decamp in favour of a competitor or a different sector (Sachdev, 2003, p. 71). This formed one of the basis of starting labour unions and to commence collective bargaining with the employers, who would be less averse to mistreating and underpaying their employees if they had labour representation Remuneration should commensurate the work done This principle work s in two ways in that on one perspective it advocates for good remuneration for employees who deliver good productivity indicators, and on another perspective, the principle advocates for a reduction in remuneration for employees whose performance is down or unpleasant (Nyland, 1987, p. 48; Burgess, 2012, p. 51; and Carey, 2006, p. 64). A worker should not benefit from the sweat of others yet those whose work produced the resources are left to wither away in poverty (Hirsch, 2010, p. 1; Low Pay Commission, 1998 and Low Pay Commission, 2000). The employee is a stakeholder in the business The input of the employee has made it necessary for national laws and international laws to be set up to oversee their rights and ensure a common labour law is adhered to. The right to form unions is an inalienable right accorded to employees by a variety of international statutes and laws, which we shall discuss. In any sector, full knowledge of a product or service is usually vested in the hands of the employees of the company. This means that the employee has the power to build or to destroy the company just as much as the company’s owners and shareholders can. Therefore, any input by the employee in regards to customers feedback or product deficiencies ought to be considered (Stone, 2010, p. 1). Many companies have failed as a result of the top management not having any clear line of communication with their employees and therefore pertinent issues which might arise are ignored. This has prompted many other companies to realize the importance of employees no matter the rank, in ensuring the success of a company. The satisfied and included an employee feels, then the likelihood of the employee being more productive increases exponentially over an employee who has no emotional attachment to the company (Butcher, T., 2005, p. 429; ILO., 2012, p. 38; and Funk and Lesch, 2005). Probability of elevation Each employee believes in the future prosperity of both the business and himself. An employee is mostly driven by the desire to improve in life and this usually is reflected in the desire for a raise or a promotion. A promotion may take different forms, such as more responsibilities to more money. The bottom line however remains that every employee expects to be a better version of himself or herself through increased responsibility or some form of upward mobility in the business/company (Howarth and Kenway, 2004, p. 115). A company whereby the employees have no hopes for improvement either monetary or in terms of improved skill set, then the company has flawed management and human resource planning. These principles are just a summary of the other immense quantity of principles, which labour, and employment laws are founded upon. The notion that every individual is entitled to fair representation is held in high esteem amongst workers as it led to the rise of the labour movement. The labour movement started as a result of the need for workers to establish a single voice to agitate for fair working terms (Lourie, 2003, p. 61). At its inception, employers took the labour movement in bad light and they fought fervently against its full implementation in most countries. In the United States, the labour movement threatened to paralyze many manufacturing companies whose wage policies were unfair to its workers. The fact that an employee could work for ages and still not be recognized as a member of staff of that company was indeed tragic as it made it impossible for the employee to get access to amenities like loans and insurance. The labour movement ensured most employers paid salaries instead of wages and ensured that there was fairness in the manner in which employees issues were being handled. Labour law is founded upon the principle that every worker is to be treated with dignity and should be remunerated in accordance with certain set industry standards and their input to the company. Labour movement shave defined the political and economic plight of many countries as they have formed the largest group of individuals championing for the same course. For job groups which have massive numbers such as teachers, doctors and workers in the transportation sector, the clout held by such groups are so immense that they always define the labour policy affecting even other workers from other diverse industries (Liontos, 1987, p. 67). The most common agitation for workers is the wage structures and remuneration for their work done. Given that each country experiences varying degrees of inflation with time, wages have become a contentious issue over time due to the need to align wages with current economic condition. This means that paying a worker the same amount of money as they have were earning 10 years ago is unfair since within that period, amenities have become slightly more expensive. Wages ought to be adjusted upwards to reflect the rising cost of living as this would ensure the worker earns enough for his family and personal growth without having to factor in inflation. Cushioning against inflation ought to be the responsibility of the government and the employer, whose goods are also becoming more expensive as a result of the same inflation. There are however, two different types of workers in every economy and these are the public servant and the private enterprise employee. There are various rules and norms dictating the manner in which each class of worker is to be treated and remunerated. There are however, some common rights such as right to fair pay and right to safe working conditions. The government can however not prescribe a set wage for private companies to pay their employees, but it can prescribe a minimum wage, which the least paid employee ought to surpass in earnings. This minimum wage is seen as an indicator of the economic conditions of a country and it is usually set to be in congruence with the general earnings of individuals and other workers in that sector. Some jurisdictions ascribe specific minimum wages for workers in different sectors and others have a blanket figure for all sectors (Pennycook, 2013, p. 93). As already mentioned in some sectors, the minimum wages is set statutorily by the government and all employers irrespective of the sector is expected to adhere to these figures. In other sectors, the minimum wage is set by the labour movement through a round of negotiations with the employer or the government. As already stated, the labour movement is a key player in agitation for workers’ rights and they have the capability of paralyzing an entire sector or economy for as long as they want. Imagine a scenario where all transport sector employees down their tools in a strike for a period of 50 days or even a week. This would mean that all members of the public suing trains and busses and any other means of public transport would be grounded and this directly translates to diminished productivity (Immervoll, 2007). Given that diminished productivity is a disadvantage to both the employer and the employee, a need to negotiate terms with the employer is necessary in order for productivity to continue. A well cared for workforce is quite productive and this ought to be a concern for the employer, who should see labour unions as a partner rather than a foe. The labour movement, through various agitations from its members files a complaint to the employer, in this case the government/public sector and agitates for increased wage earnings for its workers. This usually culminates in a round of negotiations whereby the government or employer tries to convince the labour unions that the economy cannot support the increased wages. This usually is the case in labour unions with thousands of members and where the government directly pays the workers, however in cases where the union represents a smaller number of workers such as gold or diamond-mining workers, the negotiations are usually short lived and normally the workers get what they agitate for. This type of wage negotiations are referred to as informal wage negotiations as they are not statutory based. The informal wage negotiations fall under the ambit of collective bargaining agreements. Collective bargaining agreements are the means though which labour unions negotiate with the employer for the rights of the employees. Given that all agreements have to be expressly written down to avoid any ambiguities and to give them a legal basis, the agreements duly signed and legally binding are all referred to as collective bargaining agreements. They are the collection and summation of all the negotiations and negotiated terms and they serve to provide a chronicle of all the terms agreed upon and the reference point for any future negotiations. This means that the collective bargaining agreements are the basis around which further negotiations are undertaken and they take precedence over inflations and other external market and economic conditions (Rubery and Edwards, 2003, p. 117). The external conditions can only be mentioned as reasons for the renegotiations as the agreements themselves are based on their own internal environment and conditions with which to base their terms and agreements. A collective bargaining system is a system whereby the agitations of the employees are handled in a set manner, which may vary from sector to sector. This means that systems may vary so long as the end results in an agreement bearing better terms for the employee. In an article in the wall street journal, titled “Unions vs. the right to work” the authors claim that unions do not always have the full scope of the market conditions and their continued agitations for the workers right usually results in negative consequences to the workers (Barros, 2011). These consequences could be long term such as in the event where the employer makes an internal resolution to workers being laid off with time and these decisions usually do not affect the current bargaining agreement. This therefore means that there ought to be a balance between the rights of the workers and the capability of the employer to meet these demands and rights. A statutory based wage system seems to have more controls than the collective bargaining agreement. This is however just an assumption as the economic conditions of a country are rarely ever predictable. Statutory minimum wage has its advantages and disadvantages, as this essay shall be examining in detail later. The key observation however is that the statutory minimum wages do not take into account several factors and this could result in a negative or positive result to the employees (Sachdev, 2001, p. 39; and Overall, 2003, p. 86). The government has better mechanisms of dealing with dwindling finances as compared to a private entity and this accounts for another reason why statutory minimum wage system is more robust. There are varying degrees of statutory wage systems and these normally depend on the type of economy, whether simple or complicated. One system is whereby a set wage is put which covers all sectors of the economy whereas the other system varies wages depending on the sector involved. For example, a minimum wage set for workers in the education sector could be different for one set for workers in the manufacturing sector. This method is however very complex as it can definitely not cover all the sectors of a complex economy. Collective bargaining system The term collective bargaining has been used since 1894, having been coined by Beatrice Webb an economist well revered at the time. The concept of collective bargaining had however been in place for much longer, having been used in negotiations in the 18th century. In the publication “Collaborative Bargaining: Case Studies and Recommendations” (Liontos, 1987),the author credits collective bargaining for the rise in employment standards and labour regulations in most western powers. Without the notion of collective bargaining, most workers would still be working in slave like conditions and earning much less than they live on. In the 1997 railway workers strike in London, the role of trade unions was put on the spotlight and much criticism emerged that labour unions act as a stumbling block to development. With time however these labour unions have been vindicated because the collective bargaining that were undertaken led to improved employment conditions such as better wages, better insurance covers and improved working conditions for all railway workers. Ronald Reagan in a labour day speech once stated that ….” Where free unions and collective bargaining are forbidden, freedom is lost”. Though this statement was a direct endorsement of collective bargaining from the most powerful organ in the US, it is however not the first such major endorsement as the first was attributed to president Kennedy, who first gave federal workers the right to unionize and bargain collectively. Since then other countries have sought to entwine the issue of collective bargaining and unionization with basic human rights and dignity, indeed it forms one of the central pillars of worker autonomy and liberty as it seeks to empower workers to agitate for their rights and to prescribe their terms on an equal footing with the employer. Collective bargaining is the surest means of ensuring the worker has input is duly recognized and given the prominence is duly deserves (Fingerman and Robert Kirkman, 2013, p. 97). The ability to form organized trade unions is termed as a basic human right internationally and it is entrenched in the Universal Declaration of Human Rights under Article 23. Several other international instruments have similarly ascribed formation of unions and the ability for them to negotiate on behalf of the workers as a fundamental, inalienable human right. This was further given legal precedence in Canada under the landmark ruling in Facilities Subsector Bargaining Association V. British Columbia, where the court observed, “the right to bargain collectively with an employer enhances the human dignity, liberty and autonomy of workers….” The landmark case established that an internal democracy in the workplace alongside principles of the rule of law are well catered for under collective bargaining agreement formed under the ambit of union and employer interactions. In a publication titled “Collective Gaining: A bargaining alternative” the advantages of collective bargaining are elucidated as being more robust than other systems which agitate for workers’ rights (Buidens, 1981). The publication opines that collective bargaining has been one of the biggest contributors to western living standards and claim that without the input of collective bargaining agreements, (CBA), the worker would still be living in squalid conditions in a somewhat Dickensian reality. The publication further argues that rules/laws of supply and demand should not adversely affect the rights of workers to earn better wages as the higher workers earn the more they inject back into the economy in terms of increased spending and therefore the economy would not suffer (Kelly, 2013, p. 29). In fact, the publication dares to stress that if the employer can afford to pay the workers as much as the workers are demanding then the economy would be the greatest beneficiary. Another publication in seeming support is one by Herman titled “with collective bargaining you work with the union-not against it.” This article is of the observation that the employer gains from collective bargaining agreements negotiated with labour unions because the result is an agreement, which similarly entails the employer’s rights (Herman, 1985). The agreements usually entail the expectations of both the employer and the workers. This therefore could be an opportunity for the employer to insert new terms in to the agreement, which will enable him to get more productivity from the employees all with the express agreement of all parties concerned. A collective bargaining agreement is therefore not necessarily a form of shake down meted out against an employer but rather a means for renegotiations of terms in accordance with shifting economic realities. Collective bargaining agreement with all their positive inputs also has negative inputs on the economy and the rights of workers. The first Achilles heel in CBAs is that they assume that all workers have the same problems and therefore a single solution to these problems will ensure 100% satisfaction to the employees. This is rarely ever the case as sometime special circumstances may arise which affect a small group of workers as compared to the majority who might not even be aware of the problem. This has been observed and mentioned in an article, which appeared in The Executive Educator, a journal on best human resource and management practices. The article titled “Win/win Bargaining takes perseverance: is a clear affront to some of the lofty held ideals that collective bargaining portrays. Though not wholly against collective bargaining, the article advocates for a new form of collective bargaining which ensures the needs of the minority members are similarly agitated for and represented by the unions with as much fervour as for the majority (Ehrenreich, 2002, p. 58). Statutory minimum wage In chapter 1 of an article titled “Minimum wages and the relocation of production”, the observation is that minimum wage has been the sole factor influencing rise in living standards for a majority of workers in Europe and America (Carley, 2006). This opinion is widely held all over the world and given the prominence with which Labour Day on May 1st is celebrated it is quite important to note the worker’s expectations every time minimum wage is adjusted in their respective countries. The government adjusts the minimum wage upwards after a certain number of years to reflect the rising inflation and cost of living. The minimum wage therefore acts as a cushion for workers against the vagaries of the harsh economic climate of a free market economy. Statutory minimum wage was introduced at a time when the public service was the largest employer in most western countries and especially in England. The American Great depression also significantly influenced the adoption of the minimum wage and the growth of labour unions advocating for better employment rights (Card, Krueger, Alan, 1995, p. 45). The need to have government workers earning competitive wages was the real reason behind the introduction of the minimum wage and with the improvement in the European and American economies, the wages earned by the workers needed to be reviewed systematically to reflect the economic conditions (Card, 1995). In Eyraud’s “The fundamentals of minimum wage fixing” the relation between market demands, inflation, recession and minimum wage are explained and the author opines that in a controlled economic environment, statutory minimum wage is the best defence against private sector onslaught on public employment (Eyraud, 2005). The more robust the public sector is the more it is capable of retaining talent and human resource to be able to compete in a free market with other private enterprises from regional and international markets. In the United Kingdom, the minimum wage as set by the law is at $9.57, US dollars per hour. That is as per Rubery J and Edwards P in their publication titled “Low Pay and the National Minimum Wage’ in Industrial Relations”, is the reason the standard of living in the UK has improved since 1998 when the minimum wage was set (Rubery, 2003). Other experts are similarly of the opinion that a statutory minimum wage reduces poverty and inequality and sets certain benchmarks, which ensures that fair remuneration is achieved, that is the gap between top salary earners and bottom earners is minimized. Given the complexity of the modern economy and the manner in which the economy is highly dependent on private sector, the issue of statutory minimum wage portends some negative implications. Setting a higher minimum wage is disastrous to a country’s economy as it significantly raises the public wage bill thereby making the financial resources available for development to be more strained. Minimum wage similarly damages businesses since it puts a strain on the employer to focus more resources on employee remuneration than on business development (Dickens and Manning, 2003, p. 112; and Eyraud and Saget, 2005). The employer is left with no choice but to reduce the number of employees and subject the remaining few to strenuous working hours. This in turn reduces the employment rate and in the long run injures the economy which all stakeholders are affected by. The above negative implications are well documented in an OECD publication titled “Minimum wages, minimum labour costs and the tax treatment of low wage employment”. The article stresses that unless a fine balance is struck between international competitiveness and potential loss of jobs, then the above negative implications will be a reality. The only way to increase international competitiveness is to pay better wages as compared to other jurisdictions and this should be undertaken with the economic reality as the benchmark. Poor countries should not attempt to increase their wage bills, as this will only lead to a poorer economy and even higher inflation (Buidens et al., 1981, p. 244; and Collins, 2003, p. 62). Conclusion The rights of the employee in relation to wages and remuneration are a basic human right. However, given the fact that current economies are based on a free market policy, there ought to be a fine balance between pursuing better remunerations and fostering growth in the economy through availing more funds for development. This fine balance can only be achieved if a country manages to instil a sense of productivity in their citizens where financial emoluments become secondary to industry output. Other innovative means of rewarding the employee should be considered in order to avail more funds and resources for growth and development. A comparative analysis of the minimum wage of several countries is a direct indication of the economic might of these countries. This also factors in the GDP and income per capita of the countries citizens and therefore a trend establishing Scandinavian countries at the top will be easily discernible. The USA, Germany and UK are the other big economies with good minimum wage figures. Poorer countries are supposed to focus on other means of productivity that will enhance their economic base such as agriculture and mining to empower their citizens than a reliance on wages to make them competitive globally (Abrams, 2002, P. 23; Bamber and Pochet, 2010, P. 37; and Barro, 2011, p. 1). This is the only means of ensuring there is equitable distribution of wealth and the gap between the rich and the poor is reduced to manageable levels. References Abrams, F., 2002. Below the Breadline. London: Profile Books. Bamber, G., and Pochet P., 2010. Regulating Employment Relations, Work and Labour Laws. The Netherlands: Wolters Kluwer. Barro, R., 2011. “Unions vs. The right to work.” The wall street journal February 28 Buidens, W. et al., 1981. “Collective Gaining: A bargaining alternative.” Phi Delta Kappan 63 (1981):244-245. Burgess, P., 2012. ‘United Kingdom’ in ed. Schulten T. 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