Unionization of employees - Essay Example

Running head: Unionization of Employees UNIONIZATION OF EMPLOYEES Introduction Industrial Revolution was one of the major turning points in human development. It is the process of change from an agrarian, handicraft economy to one dominated by industry and machine manufacture. Industrial revolution began in England in the 18th century which involved technological changes such as the use of iron and steel, new energy sources, the invention of new machines that increased production in relatively less time. This revolution had a major impact on the society and the labor force. Initially, this revolution made people work in factories for long hours perhaps from 14 to 16 hours. As a result of which many of them including children were forced to work in this manner and was very hard for them. Many of them did not survive the hardship and died. Though Britain was where the Industrial Revolution began, it was also the place where reformations started. In 1932 when middle class males won the right to vote in Great Britain all the reformation started. Workers formed societies and in due course it was called trade unions also known as the unionization of employees began (Wikipedia, 2008). The aim of trade unions was to fight for better working conditions and better pay as a result changes were also brought to the working conditions such as 10 hour work days, child labour laws and required school. Therefore, a trade union is an organization which was formed to promote and protect the interests of a collection of workers. Even today, unionization is helping employees and is fighting for there rights. This research paper aims to provide information on how unionization of employees has had an impact on various aspects. The status of unionization of employees varies for country to country or state to state. While in some countries trade unions possess substantial freedom, from the right to Freedom of Association, to public demonstrations and active protest against political opponents such as strikes, in other countries it is totally opposite and are actively suppressed by political or military rules, with little or no freedoms. Additionally, in these countries the prospect of violence or even death is high. Like it or not unionization of employees are political in nature, and often attract both positive and negative consequences. Over the last few decades, trade unions have developed into a number of forms propagandize by differing political and economic regimes. Trade unions in the early days, such as the Friendly Societies, often offered a number of benefits to insure members against unemployment, ill health, old age and funeral expenses. Similarly, in many industrialized countries, these functions have been taken up by the state. In addition, the provision of professional training, legal advice, and representation for members still remain among the main benefits of trade union membership. The second and one of the most important aims of unionization of employees is that they are able to operate openly, are legal bodies and are recognised by employers, they may negotiate with employers over wages and working conditions. If the demands are not met, employees union may organize strikes or resistance to lockouts if their particular goals are not agreed by the authorities. They may also go to the extent of campaigning, undertake lobbying, or financially support individual candidates or parties for public office who will help to fulfil their demands (Wikipedia, 2008). There are several researchers who have devoted several years working on the effects of unionization of employees. Brown and Medoff (1978) are the pioneers who worked on this issue. Following the pioneering work and inspired by the controversial work of Freeman and Medoff (1984), a number of empirical studies have studied the impact of union on productivity particularly in UK and the USA. Although a number of authors have estimated positive union productivity differentials, there is a common agreement in the literature about unionism having a negative impact on productivity and output (Nickel et al., 1989; Brown and Medoff, 1978; and Gregg et al., 1993). This negative impact on productivity is also reported by earlier economy-wide studies (Koedijk and Kremers, 1996; DeFina, 1983; and Lovell et al., 1988). The impact of unionization of employees on productivity differentials may be a result of a variety of mechanisms. For instance, unionism can affect the organization and effectiveness of production at a firm-level particularly in the pace of technological innovation and capital accumulation, training and manning levels and so forth. Unionism can have an impact on average wages and wage inflation. In addition it can also have its effects on inflation, interest rates, investment and output growth, as well as on the national comparative advantages and international trade. A number of studies at the firm and industry levels have provided substantiation of a negative productivity effect of unionism. In general the negative union productivity effects can be assumed if unions impose strict rules or protest in the introduction of new technologies and working practices, or if they reduce profitability and investment. On the other hand, if the unions are with good intentions they can increase workers' input and involvement and, hence, production efficiency. And in such cases by increasing their labour costs function, they can foster innovation and quality-based competition from the side of management. Compulsory unionism in any form--"union," "closed," or "agency" shop is a contradiction of the Right to Work principle and the fundamental human right that the principle represents. The National Right to Work Committee advocates that every individual must have the right, but must not be compelled, to join a labor union (NRTWLDF, 1996). Unions challenge that continuous pressure put on management for higher wages, shorter working hours, retirement plans and other benefits has forced management to reduce costs and to operate businesses resourcefully. There may be a considerable element of truth in this statement, but at the same time there has been a tendency for certain unions to resort to restrictive practice, to slow progress and even to have an influence on the closing of plants (engr.siu.edu, N.D.). Though such acts may not be beneficial to individuals working in those companies, they are responsible for great economic loss to the country and are also responsible for unemployment. It is not that union workers are lazy, a favourite canard of the right; they are higher quality than one would expect for the job they are doing. However, unions often offer resistance to work processes that might increase efficiency, and not just ones that would decrease labour demand.Unions also spend a lot of time trying to work in featherbedding provisions to their contracts, in other words they force the management to hire more workers than required for a particular task. As a result of this union will have more people doing a job and more workers paying dues. However more workers may not have a dramatic influence on the productivity of the company. Trade reform especially in developing countries may have resulted in the short run to higher unemployment and greater poverty. This may be the result of persistent labour market distortions like the low degree of wage flexibility and imperfect labour mobility across sectors. Opening a country's markets to foreign MNCs, for example, may result in reduction of the market power of domestic firms and increase competitive pressures on them, there by forcing at least some of them out of their business and increase the problem of unemployment. However, if we take the positive aspect of this in the longer run, these countries may become more efficient in using its productive resources and thereby enjoying higher growth rates and lower poverty. Unfortunately those countries looking for a short term benefit may be disappointed with the inability to compete, and the presence of labour market segmentation due to minimum wage legislation or wage-setting behaviour by firms or trade unions, as well as imperfect mobility across sectors, may hamper the reallocation of all categories of labour from the non-tradable sector to the tradable sector that a reduction in tariffs usually entails (Agnor and Aizenman, 1996). As a result, both unemployment and poverty may rise. Conversely, trade liberalization may also result in increasing poverty by reducing the demand for unskilled labour and a deteriorating the wage income distribution. Finally, it can be said that the activities of union should be in such a way to promote productivity, increase profitability to the company and then demand for the wellness of the workers. Only then the productivity can increase. Once the productivity increases it would be beneficial for the company and the union can seek the management for better compensation. Additionally, the improvement in production methods and better unionization can be beneficial to the entire nation. References Agnor, R.P, and Aizenman, J. (1996) Trade Liberalization and Unemployment, Journal of International Trade and Development, 5 (September 1996), pp 265-86. Brown C. and Medoff J. (1978), Trade unions in the production process, Journal of Political Economy, Vol.86, pp.355-378. DeFina R. (1983), "Unions, relative wages and economic efficiency", Journal of Labor Economics, Vol.1, No4, pp.408-429. engr.siu.edu, (N.D.) Chapter 1: Productivity and Manufacturing Management, Retrieved May 18, 2008, from http://www.engr.siu.edu/staff2/deruntz/IT440/Chapter1.doc Freeman R. and Medoff J. (1984), What do Unions do Basic Books, NY. Gregg P., Machin S. and Metcalf D. (1993), Signals and cycles: productivity growth and changes in union status in British companies, 1984-1989, Economic Journal, Vol.103, pp.894-907. Koedijk K. and Kremers, J. (1996), Deregulation: a political economy analysis, Economic Policy, Vol.26, pp.443-467. Lovell C., Sickles R. and Warren Jr R. (1988), "The effects of unionisation on labour productivity: some additional evidence", Journal of Labor Research, vol.9, pp.55-63. NRTWLDF, (1996).The Right to Work Principle: Frequently Asked Questions. National Right to Work Legal Defense Foundation, Inc. Retrieved May 18, 2008, from http://www.nrtw.org/b/rtw_faq.htm. Nickell S., Wadhwani S. and Wall M. (1989), Unions and productivity growth in Britain, 1974-86: evidence from Company Accounts data, CLE Working Paper No. 1149, LSE. Wikipedia, (2008) Trade union, Wikimedia Foundation, Inc. Retrieved May 18, 2008, from, http://en.wikipedia.org/wiki/Trade_union Read More