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Public Sector vs. Private Sector - Essay Example

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One of the key differences between public sector and private sector collective bargaining concerns the structure and ways in which upper management receives pay increases. In private sector upper management, salaries are often directly related to their individual performance…
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Public Sector vs. Private Sector
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Public vs. Private Sector One of the key differences between public sector and private sector collective bargaining concerns the structure and ways in which upper management receives pay increases. In private sector upper management, salaries are often directly related to their individual performance. For instance, most executives own significant shares of company stock or are required to display tangible increases in revenue in order to receive pay raises. Exactly the opposite is true of public sector employees. In the public sector, upper-level salaries are more related to that of employees above and below them, as they are oftentimes negotiated by the unions. As a result, they have a vested interest in seeing salaries rise for all employees.
Another essential difference in collective bargaining between private and public sectors is related to location and labor value. Unlike private sector companies, public sector institutions are not capable of threatening to relocate for lower-wage costs (Guyton 213). This is evident in education where in response to union strikes, schools cannot possibly outsource employment overseas, as companies like Nike and have done. However, unions are able to use statistics from surrounding areas to pressure public sector companies to raise wages.
Indeed union negotiations are one of the major distinguishing characteristics in private and public sector collective bargaining. Private salary disputes are restricted by the knowledge that customers are able to obtain products elsewhere, whereas in the public realm it is often difficult or impossible for patrons to go to the closet competitor (Boggs 9). Libraries are an example of this situation. The union representatives are often long-term officials who have experience in negotiations, whereas the officials they are dealing with are appointed or elected officials who often only spend short amounts of time in their positions. As a result, negotiations are somewhat slanted in favor of the public union representatives.
While labor relations in the United States used to be more highly shifted toward private sector employee union membership, major changes have occurred in the intervening fifty-years. For instance, in 1956 American private sector union membership was 34.7%, more than three times as much as the public sector rate of 11.1%. In 2006, public and private sectors were seen to undergo and drastic change as union membership had shifted from 36.2% in the public sector to 7.4%. for the private sector (Guyton 210).
When distinguishing public and private sector labor relations it’s important to distinguish between employee perspectives of their work environments. When asked to describe their impressions of public vs. private sector work environments, employees responded with varying answers. Public employees indicated that oftentimes projects weren’t as directly related to market suitability and were undertaken with knowledge that the results wouldn’t be implemented for another generation (Nuygen 75). Conversely, private sector projections must answer to immediate profit gains and as a result are directly related to market feasibility. When considering labor relations, this is a distinguishing feature as private sector employees see their projects to completion where public sector employees must be content with projects that have worked on not coming to fruition for long periods.
Clearly, there are extreme differences in public vs. private sector collective bargaining and labor relations. While public sector collective bargaining is hindered by its inability to relocate to decrease wages, private sector companies possess this leverage. However, public sector companies have the advantage of offering services that aren’t easily replaceable, where consumers are able to switch to another private sector company if they aren’t able to meet labor demands. In determining labor relations it’s clear that the private sectors more direct connection to immediate profits determines general workplace relations and influences company goals.
References
Boggs, Carl.  1999.  "Economic Debate:  Where Social Movements and Labor Meet" in Brecher and
Costello, eds.:
Guyton, Jason.  2007.  Public vs. Private Sector: If You Fail We All Fail. Ithaca and London: 
Cornell University Press.
Nuygen, Costello.  2003.  "American Labor:  The Promise of Decline" Los Angeles:  UCLA Institute of
Industrial Relations. Read More
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