Merits of Collective Bargaining and the Impact of Globalization on the Trade Union Movement - Term Paper Example

Order 418504 Topic: ‘The trend towards decentralisation of collective bargaining has been mainly at the behest of management’. Discuss. Introduction: “Unity!--and want sins are committed in the name of unity!” Sir Winston Churchill, at the time of II World War said, “It is better to have a world united than a world divided; but it is also better to have a world divided than a world destroyed.” The import of the above two observations are applicable in the context of the trade union movement as a whole and specifically explained in the ‘Example’ section of this essay. Most of the trade unions often profess that welfare of the workers is their sole concern. In reality, they are affiliated to one political party or the other, and subscribe to particular political philosophies, and frame the action programmes, like strikes etc. to further the cause accordingly. Collective bargaining is the weapon at the hands of the working class. Used properly, it is a magnificent tool to increase the output of the workers as well as to improve their living conditions. Workers can build an organisation; and if it breaks, to a great extent, the militant attitude of the workers must share the responsibility. Workers need to be basically sound and industrious and basic conditions needs to be created for the workers to become basically sound and industrious! This is the intrinsic strength behind the principle of true collective bargaining. Collective Bargaining: Definitions: a)all negotiations between employers (or employers’ organisations) and workers organisations for the purposes of determining terms and conditions of employment and/or regulating relations between them (ILO). b) ‘A process by which trade unions and, similar associations representing groups of employees, negotiate with employers or their representatives with the object of reaching collective agreements.’ History of Collective Bargaining: “Collective Bargaining” is the bridge between the employer and the employees union. It improves relations on account of its intrinsic strength. “It requires a continuing dialogue, which generally results in better understanding of each other’s views; Where collective bargaining institutionalises methods for the settlement of disputes, differences or disputes are less likely to result in trade union action;. It could lead to cooperation even in areas not covered by collective bargaining arrangements.” (Overview….) Gone is the era, when the trade unions take the stand that the management is the permanent enemy, and the trade unions need to be at war with it always. Globalisation of production and the internet revolution, have strongly impacted the concepts governing trade union movement and collective bargaining dominates the scene. What will be discussed in the essay? In this essay, I propose to discuss in brief, a) Merits of collective bargaining, b) Impact of globalisation on trade union movement. Merits of collective bargaining: The functioning of the traditional trade union movement, under the shadow of political maneuverings, is not conducive to a healthy industrial climate. Management and the union leaders view the move of the other with suspicion. When a service industry on a local or at the national level resorts to strikes, apart from the management and the workers, the real sufferers are the general public, for no fault of theirs. For example, in a national level strike of the transporters, if a proper costing is done about the actual losses, the amount would be staggering. Damage to the national economy can be averted with the proper functioning of the machinery for collective bargaining. Disputes cannot be avoided, when conflicting interests are at work, but when the workers and the management see the issues beyond the current t dispute, the solution becomes easy. Conciliation and mediation are effective tools to solve a dispute. Good relationship is conducive to healthy working atmosphere, and increase productivity. An agreed method to solve the issues, is a great assurance. Inter-union rivalries will be minimum and the situation of constant change in union memberships can be avoided. The current trend is decentralisation towards collective bargaining, which is good for an individual establishment, as such an arrangement has an advantage of the enterprise level bargaining, tailored to the economic conditions of the concern, like its capacity to pay, market conditions and objectives. The effects of globalization and international competition have hastened the trend towards greater decentralisaton of collective bargaining from sector to company level. The growth of collective bargaining is due to gradual erosion in the power of unions since 1980s and 1990s.The preference of management is for decentralisation of bargaining whereas unions prefer centralisation. Collective bargaining is conducive to industrial democracy and for building up peaceful social conditions. The best bet for collective bargaining is-- the agreements guarantee industrial peace for the duration of agreements and this will have salutary effect on productivity. Impact of globalisation on trade union movement: When the river is in flood, both the banks of the river are inundated. Flood doesnt show mercy for a particular bank. Similar is the effect of globalisation. At the highest level, the effects of the globalisation have benefited the humankind. But it has created a scare amongst the competing production units and the trade unions on the issue of employment. More advanced technology means less requirement of man-power. The issue of collective bargaining on employment has occupied the center-stage.“In recent years, collective bargaining in many European countries has explicitly taken on the issue of preserving and creating employment. In many states, collective agreements at all levels have come up with new ways of avoiding or reducing planned job losses, or even of increasing employment levels. These have ranged from national, sectoral or regional tripartite or bipartite "employment alliances/pacts" to company-specific agreements between employers and works councils/trade unions.” (Collective….) Fresh water is gushing in the area of decentralisation of collective bargaining on account of the compulsion of the circumstances. No worker would like to lose his job, and no employer would like to support an extra hand, unemployable from the point of view of the economics of the organisation. The need for entrepreneurship and job creation has been felt as never before. “Local employment initiatives and territorial pacts bringing together all involved at local, regional and national levels, in a broad partnership approach have proved particularly effective. The lessons drawn from these successful experiences need to be promoted as part of a wider local development drive throughout Europe."(Collective….) A new responsibility rests on the leadership of trade unions. If they try to evade or manipulate, they will do so at the peril of the workforce that forms their membership. Wage determination needs to be a responsible act, not simply fighting for the incremental values in the pay-packets. No organisation can afford to pay to its workers, what it cannot afford to pay! This is the stark reality of the current economic trends. In the changed circumstances, the union leadership has the major role to play in the labor market to increase investment, productivity and welfare of the workforce so that the existing jobs can be retained and additional job opportunities can be created. The collective bargaining possibilities need to be explored at the national and regional level, sector level and at company level, especially when most of the economies all over the world are suffering the pangs of recession. Apart from actively contributing to increase in productivity, trade-unions need to work for the organizational framework that may indirectly encourage the employers attitude towards creating new jobs. But it is unreasonable to expect that the employer will sign agreements, guaranteeing additional job opportunities. The assurance of existing workplaces is the best option in the circumstances. The present situation demands that the unions must be responsive to the possible demands of the employer for employee concession on wages, wage freeze, working hours etc. The Collective bargaining policy is not the panacea for the problems. It can be just one element among others in a broader political and economic framework like social policy, fiscal policy, monetary policy and economic policy etc. As the executive summary of the Commissions 1997 Employment in Europe report states: "While in the short term, net job creation depends mainly on the rate of output growth, in the longer term it also depends on institutional structures and societal choice on the priority given to employment and how possible conflicts, between this and maintaining productivity growth and competitiveness are reconciled."(Collective….) In fine, the recent pressures on management are the product of increasing globalisation of product markets, increased international competition, the rapid development of new technology, and new forms of work organisations. Keith Sisson and Paul Marginson rightly observe, “Growing European economic integration has encouraged restructuring within multinational companies (MNCs), involving the development of organization-based employment systems, changing forms of management control and a shift in bargaining power. These developments are promoting the decentralization of collective bargaining and challenging established structures of multi-employer bargaining. How far MNCs withdraw from multi-employer bargaining will however be shaped by the different national industrial relations systems.”(1987) Soskice throws more light on the complexity of bargaining. He writes, “The problem with this focus on (de)centralization is that it fails to capture the complexity of bargaining. Above all, coordination is argued to dominate centralization as a performance factor.”(1990). L Baccaro, explains the situation on centralised collective bargaining agreements by citing the example of Italy. He writes, “According to neo-corporatist approach to the problem of compliance, worker control over union policy is incompatible with centralized wage regulation, because only associations in which national leaders are insulated from their members are capable of delivering rank-and-file acceptance of wage-moderation. This analysis of centralised collective bargaining agreements in Italy in 1980s and 1990s provides a critical re-examination of the traditional neo-corporatist approach. The author, drawing on archival research and interviews, argues that centralization can be entirely compatible with decision-making procedures in which rank-and-file workers have ultimate decision-making power. In fact, the Italian labor movement’s adoption of more “democratic” decision-making procedures, he claims, was instrumental in generating and sustaining centralized collective bargaining arrangements in Italy in the early 1990s.”(2000) Next to politics perhaps, the trade union is the area dominated by vested interests. When political interests take the front seat, worker’s interests have invariably suffered. The process of change over that began in the 1980s and 1990s towards collective bargaining, is not the process welcomed by the union leadership willingly. They had no alternative. The testing ground was Europe, as some of the European countries, including Great Britain, had suffered the worst of the trade unionism. The problems of each sector were different, with globalization and internet revolution impacting different sectors at different levels. For example, computerization affected the employment potentialities in the banking sector adversely as one computer does the job of ‘ten clerks.’ Throwing light on the issue Paul Marginson writes, “The sector level remains the least developed element of the emerging European-level industrial relations framework. …The first, through the sector social dialogue, is resulting in ‘soft’ forms of regulation. The second, driven forward by trade unions, comprises cross-border bargaining coordination initiatives. The relative prominence of social dialogue and coordinated bargaining, respectively, differs markedly between sectors. Coordinated bargaining and framework agreements adopted through social dialogue involve daunting challenges of implementation, relying as they do on the voluntary cooperation, commitment and actions of the European- and national-level actors involved.”(2005) Conflicts and more conflicts-- was the watchword of the militant trade union movement that plagued most of the European countries till the 1980s. The stubborn attitude of the left trade union leaders was to a great extent responsible for what was happening in the labour market institutions. Without the strong will of the government to act, co-ordination arrangements were not easy to work out. The necessity of the labour institutions was not denied, but not to the extent of dictating terms to the government as was the case in Great Britain, during the pre-Margaret Thatcher period. Authors Paul Teague and John Grahl write, “Labour market institutions in most European countries are caught mid-stream between flexibility and coordination. On the one hand, most countries fail to capture the positive externalities that may arise from the mutual interdependence of institutions and ground level labour market behaviour. Productive and commercial changes make it exceptionally difficult to create such coordination arrangements. At the same time, there has not been a widespread rejection of labour market institutions...Thus whilst institutions still matter, their role should not be overstated. In many ways, a governance gap is emerging in the European labour market.”(1998) Example: What will happen to the trade union movement and the fate of the workers, with arrogant leadership that has involvement in politics? Here is an example. Margaret Thatcher, the former Prime Minister of Great Britain, challenging the leadership of Miners during their year-long strike that finally ended in a fiasco said, “We had to fight the enemy without in the Falklands. We always have to be aware of the enemy within, which is much more difficult to fight and more dangerous to liberty.” That was her biggest political challenge and the trade union movement has never been the same, especially in Great Britain. (1980) The impact of the unions in the 1970s was great. Trade union barons wielded tremendous clout. Britain was afflicted with a series of strikes and miners leader Joe Gormley and transport union leader Jack Jones called the shots. The major industries affected were Post Office, the ferries, steel works etc. Successive governments were humiliated by the union leaders. The union leaders, pampered by the Labor Government, began to challenge the government. Union power was getting out of hand. The ordinary people suffered a lot, and many trade unionists were fed up with strikes and walkouts. The cordial relationship which the Labour Government tried to build up with the trade union leaders, and the soft-peddling, became the national liability. In May 1979, Mrs. Thatcher became the Prime Minister and she knew how to tame the union leaders. With her imaginative economic policies she weakened the membership base of the unions. Within 10 years-- between 70s and 80s--the membership of the union was reduced to half from 12 million. Legal protection to unions was stripped. Strike ballots became compulsory. But Maggie still wanted a showdown with a major union of minors. She planned her move imaginatively by building up massive coal stocks and though the strike lasted for one year, it petered out without any gain to the workers. The miners lost, returned to work humiliated, in 1985. Conclusion: The trade unions all over the world leaned heavily on the political ideologies for their sustenance and growth until the 1980s. Major action plans, national strikes etc. were carried out, in tandem with the political needs. Aiding the process of revolution of their concept was the declared plan of the leftist unions. Activities of the trade union were a step in the ladder, to reach their ultimate goal. Welfare of workers was the secondary objective. Globalization of business and internet revolution did the trick. Hegemony of the trade union leaders began to diminish and they were helpless to control the impact of the technological innovations that engulfed the commercial world. The workers and the management both realized the new demands of the changed situation. With the breaking up of Russia, and China opting for economic reforms on the capitalist lines, leftist unions lost much of their sheen and the fountains of their sources of inspiration began to dry. Final thoughts: “Brutal force has not won anything durable,” averred Adolph Hitler days before his death at the conclusion of the II World War. This is true of the trade union movement as well. The pages of history of trade union movement provide us with many examples, where unions took to the path of violence and workers paid with their lives. Things have changed much. Trade Union movement has become enlightened and the workers have realised that for any organization to establish in the business world, higher productivity and better management are the proper answers. The unions have become more responsive to constructive dynamism, and growth of the organization for which they are working for. ********* Reference List: Churchill, Sir Winston, PDF: File Format: PDF/Adobe Acrobat - Quick View [Online] Available at--www.derecho.unam.mx/iusmun/descargas/HB_SCbueno.pdf. [Accessed on March 20, 2010] Collective bargaining on employment in Europe[Online] Available at--www.eurofound.europa.eu › EIR Online › 1997 › 10 – Cached, [Accessed on March 20, 2010] L. Baccaro (2000) ‘Centralised Collective Bargaining and the Problem of Compliance’, --Industrial and Labour Relations Review, Vol.53 No.4 (July 2000) Marginson, Paul, 2005. Industrial Relations at European Sector Level: The Weak Link? Economic and Industrial Democracy, Vol. 26, No. 4, 511-540 DOI: 10.1177/0143831X05057451 Overview – Website [Online] Available at--www.books.iupindia.org/overview.asp?bookid=IB1101206 - Cached – Similar. [Accessed on March, 20, 2010.] Sisson, Keith (Author) Marginson, Paul. 1996. Article: Multinational Companies and the Future of Collective Bargaining: A Review of the Research Issues: European Journal of Industrial Relations, Vol. 2, No. 2, 173-197 DOI: 10.1177/095968019622003 Soskice, D., 1990. Wage Determination: The Changing Role of Institutions in Advanced Industrialized Countries. Oxford Review of Economic Policy, 6, p. 36-6 Teague, Paul1; Grahl, John2.1998.Institutions and Labour Market Performance in Western Europe. Political Studies, Volume 46, Number 1, March 1998 , pp. 1-18(18) Wilenius, Paul, 2004. BBC NEWS | UK | Politics | Enemies within: Thatcher and the unions... Margaret Thatcher visiting Wistow colliery, Yorkshire, in 1980... (5 March, 2004) Available at--news.bbc.co.uk/2/hi/3067563.stm - Cached – Similar, [Accessed on March 20, 2010]. Read More