Economics of Labor - Essay Example

 Economics of labor Introduction The managers at current work places are faced with various challenges that make the management task more demanding. The kind of relations that is developed between the management and the employees of an organization and that developed between the employees often affect the overall performance of the organization. The working conditions that prevail at a given work places, the kind of leadership and governance exercise by the leaders of the organization as well as the remuneration that received by the employees are key determinants of the performance of the employees. The way in which the management considers and rewards the hard working employees will also influence the employee’s satisfaction by a particular job (Imundo, 1993, p.158). A kind of good will shall be developed following a positive appraisal that is essential for effective performance. The above determinants of effective performance of employees may not be achieved in a given organization or governmental department. There would be then a need by the employees to have their issues solved by the relevant management authorities. Various labor unions have been put in place that advocate for the rights of the employees. They intercede between the employees and the relevant authority by engaging in some peaceful dialogue to obtain a solution to the problems that have been raised by the employees. The labor union may come to agreement with the relevant authorities on the possible corrective measures that can be adopted. However, in the event that an agreement is not reached, the employees can employ another technique to show their need to be addressed concerning issues at work places (Sapsford, 1981, p.143). They take the advantage that the success of all the activities of the organizations relies on them and putting a halt to little halt may provide some solution (Brecher, 1997, p.2). Strikes are organized collectively since an individual who withholds his/her services can easily be expelled as compared to the group. Strikes that are often organized by employees can take different forms depending on the nature of the job, the urgency with which a corrective measure needs to be adopted and the issue that needs to be addressed. The educators calling for a salary increase can simply decide to put pens and chalks down while going to the learning institutions as usual or they may intensify it and take to streets. The nurses in public hospital may decide to boycott their duty to attend to patience. Alternatively, an authoritarian manager of an organization can be forcefully evicted out of office by the angry employees. The effects of such strikes are adverse on the economic development of a given region (Addison & Teixeira, 2006, p.4). Common causes of strikes There are different factors that often lead to strikes by employees in a given organization. The strikes by the workers through the unions are geared towards streamlining the monopoly that might be exercised by the management of organizations. Achieving this requires a union made of leaders with the capability of managing teams and can deal with various emerging issues (Griffin & Stacey, 2005, p.29). One common cause of strike is poor working conditions at the work places coupled with a lot of workload leading to job depression and stress. The employees often complain of long working hours and workload imposed on them probably due to understaffing. This is followed by a pressure from the management to meet strict deadline leading to job stress. Related to the poor working conditions is the cry for salary and wages that are proportional to the tasks that are carried out by the employees. This, however, takes different directions depending on who determines the wages of the employees (Addison & Teixeira, 2006, p.5). The employees often complain that despite the long working hours and the heavy workloads, they are not provided with remunerations commensurate to their efforts. The rewards given to employees should be proportional to their performance (Imundo, 1993, p.158). Another common cause of strike is poor leadership and governance. It is often required that the management of an organization be that which listens to the requirements of the employees. The effective decision making processes in an organization are those that consult with the workers unions and seeks to address their issues (Srivastava, 2005, p.1; Singla, 2009, p.5). The needs of the employees need to be addressed. Thus, an autocratic leadership where a manager dictates the plans of an organization will not get along well with the employees (Daft & Lane, 2007, p.44). Poor management will also hinder employee appraisal that is necessary for the motivation of employees. Discrimination based on gender, race or ethnicity can also result into strike in a multicultural organization. There is always a need for equity right from the recruitment of the employees (Collins, 2009, p.47). The management of an organization could be exercising unequal treatment of the employees based on gender, racial or ethnic differences. The factions of the employees that are victims of such discriminations are often irritated and resort to strike as a move to obtain justice. While it is usually believed that strikes occur due to some irrational decisions either by the trade unions or by the management of the firm, it should also be noted that just wrong information or total lack of information could also contribute to disagreement between the union and the management of organization (Fudenberg et al, 1982, p.2). Theoretical models of strike activity The theoretical models of the strike activities have often shown an association of strike incidences to wage rates. Various models developed in the 1980s showed that there was an inverse relation between wage rates and the incidence and durations of strikes by employees (Card 1987, p.3). This meant that the smaller the wage rates, the higher the probability of occurrences of strikes. It is believed in the theoretical context that, the workers union will advocate for wage increase whereas the firm has an interest in maximizing its revenue. Achieving the two is not so obvious and it is what calls for negotiation between the firm and the workers union. The union proposes the wage rates that are believed to be appropriate and the firm examines this rate and can reject or accept it depending on its capability. The rejection of such wage rate causes strike among the employees (Fudenberg et al, 1982, p.3). Contrary to the theoretical models, there were other empirical evidences that the wage rates were positively related to the duration and occurrence of strikes. The exact association was thus not determined by these models. Strikes have been seen to occur in spite of the agreements entered into by the union and management of organization on ways of improving the welfare of the employees (Fudenberg et al, 1982, p.2). Historical patterns of the strike incidence in the UK The strikes in the UK had been noted to reoccur in regular patterns over a long period. This was particularly seen in the period between 1960s and 1980 when there were regular mixed reactions between trade unions and the Labor Party. The early period (1893- 1966) showed some irregular (Church & Outram, 2002, p.2). The problem occurred due to the ideological differences on the appropriate policies that would govern industrial relations of the workers. However, the rates of strikes have been seen to decrease in the last few decades perhaps due to the adoption of modern technology in most of the organizational operations that reduces density of employees that can gang up and strike. The modern technology could have probably improvement management of organization. There various statistical materials that focuses on the labor market in the United Kingdom over the past. The individual participation in the labor force, the kind of jobs performed, the working patterns and the corresponding salary and wages are available that can be used to study the relations in the labor market. For instance, a report that was released on 13 April 2011 by the Office for Nation Statistics (ONS) showed that there was an increase in the employment rate to 70.7% up from 70.5% recorded in the previous quarter (p.2). It was also reported that the unemployment rate had decreased by 0.1% to 7.8% (ONS 2011, p.5). Unemployment rate was found to be very high among the youths aged 16 to 24 with a rate of 20.4%. The average income per week including all the other allowances was found to be 448 Sterling pounds (ONS 2011, p.7). Such statistical data can help the government in settling strikes that might be witnessed in the labor market (Addison & Teixeira, 2006, p.8). Effects of strike activities The effects of such strikes are often adverse on the economic development of a given nation and are thus a point of concern in economics. There are measures of industrial relations that can give an insight of these effects. The duration of the strike, the number of employees involved and how often the strikes recur will greatly affect the operation of an organization (Addison & Teixeira, 2006, p.7).. The challenge it poses is the irregular behaviors that are often witnessed in the occurrences of the strikes that make their management hard. While it is true that the strikes are meant to advocate for the rights of the workers, some individuals can take the advantage of such circumstances to hit at the personal differences that they have had with the authorities that are supposed to provide corrective measures. In fact, it is during strikes that true characters of the individual employees and their influence behind poor organizational governance may be revealed (Brecher, 1997, p.273). During the period of strike, the activities of an organization are brought to a stand still leading to heavy losses. The clients of the organization cannot be served leading to loss on both sides (Lewin, p.116). Some strikes are also characterized by violent acts including destruction of property leading to heavy material loss. The restoration of the destroyed property is not only expensive but is also time consuming. Strikes can also lead to massive loss of lives in the event that it is organized by health care providers or other workers provided services that are of basic human needs. Strikes also lead to loss of jobs increasing unemployment rates. Cases have been witnessed where the striking workers are all dismissed or the size of the work force is reduced following a severe strike. In the case of multinational enterprise, the operation in a given region can be terminated if it is characterized by series of strikes. Strikes can also divide the work force of a given organization into two factions thus reducing their ability to work as a team towards common organizational objectives. In the event that a strike is organized and some of the workers do not co-operate due to the fear of consequences that may follow, an enmity is created between these two groups of workers. The arising element of distrust will hinder future collective bargaining by the employees resulting into poorer working conditions. This can be avoided by developing a solid organizational culture (Kusluvan, 2003, p.264). On the other hand, the strikes can have a positive impact on the overall performance of an organization. The corrective measures that are required by the employees may be forcefully achieved thereby improving the employees’ performance. There can be legislative provisions by the government that determine the relationship in an employment. In the event that little or no damages were recorded during the strike, this shall be registered as positive impact of the collective strength of the organization. Conclusion It is thus important to note that an effective management of a given organization or government department requires the development of good relations between all the stakeholders of an organization. The employees of the organizations need to have a union that advocate for their. The union acts as a link to the authority that ensures a formal procedure in addressing the issues. The employees should be loyal to the union and abide by its provisions. Besides, the management principles as defined in economics require that the managers give room to the needs of the employees of the organization, and this is the key to effective management. The managers should address the issues as they are raised by the workers unions to avoid the future negative reactions by the employees. On the other hand, the employees need to adopt the organizational cultures that require formal solution of arising issues. The fact that all these fail to take place and a strike is witnessed means an irresponsible behavior by either the management or the employees. Therefore, strikes are irrational acts and are beyond the scope of economic analysis. Reference List Addison, J. and Teixeira, P., 2006. Does the Quality of Industrial Relations Matter for the Macro Economy? A Cross-Country Analysis Using Strikes Data. IZA Discussion Paper No. 1968. Brecher, J., 1997. Strike! Fourth ed. Cambridge: South End Press. Card, D., 1987. An Empirical Study of Strikes and Wages Princeton University. (Online). Available from: http://www.irs.princeton.edu/pubs/pdfs/221.pdf (Accessed April 30, 2011). Church, R. and Outram, Q., 2002. Strikes and Solidarity: Coalfield Conflict in Britain, 1889-1966. Fourth edition. Cambridge: Cambridge University Press. Collins, D., (2009). Essentials of Business Ethics: Creating an Organization of High Integrity and Superior Performance. New Jersey: John Wiley and Sons. Daft, R. and Lane, P., 2007. The leadership experience. South-Western: Cengage Learning. Fudenberg, D. et al. 1982. Strike activity and wage settlements. UCLA Department of Economics Griffin, D. and Stacey, R., 2005. Complexity and the experience of leading organizations. New York: Taylor & Francis Imundo, L., 1993. Effective Supervisor's Handbook. Second Ed. New York: AMACOM Div American Mgmt Assn. Kusluvan, 2003. Managing employee attitudes and behaviors in the tourism and hospitality. New York: Nova Science publisher. Lewin, D., 1992. Research frontiers in industrial relations and human resources. NY: Cornell University Press Office for National Statistics. 2011. Labor Market Statistics: Statistical Bulletin: Labor Market. (Online). Available from: http://www.statistics.gov.uk/pdfdir/lmsuk0411.pdf (Accessed April 30, 2011). Sapsford, D., 1981. Labour market economics. New York: Taylor & Francis. Singla, R., 2009 Business Management. New Delhi: FK publications. Srivastava, S., 2005. Organizational Behaviour and Management. New Delhi: Sarup & Sons. Read More