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ECONOMIC VIEW OF COLLECTIVE BARGAINING

ECONOMIC VIEW OF COLLECTIVE BARGAINING. Unions a Disruption to Competitive Markets Cause a Misallocation of Resources. UNIONIZED SECTOR. NONUNION SECTOR. Sn. Wu. Su. Wn. Wn. Wu. Eu. En. Wn. Wu. Management Perspective. Dominant in U.S. Flows from Economic Perspective

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ECONOMIC VIEW OF COLLECTIVE BARGAINING

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  1. ECONOMIC VIEW OF COLLECTIVE BARGAINING • Unions a Disruption to Competitive Markets • Cause a Misallocation of Resources Theories

  2. UNIONIZED SECTOR NONUNION SECTOR Sn Wu Su Wn Wn Wu Eu En Wn Wu

  3. Management Perspective • Dominant in U.S. • Flows from Economic Perspective • Firm (management) has knowledge and legal authority/responsibility to allocate resources (capital and labor) efficiently in best interests of stakeholders and customers of firm Theories

  4. Perlman (1928) • Strength of institution of private property • Capacity of business to convince society that only they know how to run things • If business is prevented from doing what it is best for business, wealth and jobs will decline • Acceptance by body politic of this Theories

  5. Implications for Unions and Collective Bargaining • Legitimizes opposition to collective bargaining and unions • Unions seen as preventing management from doing what it must do • Forces unions into a lower, unequal status • Default is nonunion Theories

  6. Two Concepts • Firms are price takers in all markets (labor and product) • Employment an economic transaction • Both parties are equal and price takers • Raising wages or compensation through collective bargaining is an inefficient use of market power • Management of firms must have full discretion over resources to make decisions in best interest of • efficiency (economic view) • Shareholders/owners (private property view) Theories

  7. Relax Price-Taker Assumption for Labor Market • Inequality • Status • Bargaining Power • Bilateral Perspective • Balance Required • Economic transaction concept becomes less appropriate than under the price taker assumption • Need other ways to structure employment relationship Theories

  8. Concept of Countervailing Power • Large institutions will offset the counter the influence of other large institutions • Assume all institutions pursue their self-interest • Unions will counter firm power • “checks and balance” type system Theories

  9. GOVERNANCE VIEW • Focuses on how decisions are made • no CB - unilaterally • CB – jointly or negotiated • Permits workers to participate in decisions affecting them • Transference of notions of democracy to the workplace • property rights only provide authority over property • does not necessarily provide authority over people Theories

  10. INDUSTRIAL DEMOCRACY VIEW • Workplace is analogous to society • Cannot have democracy in society without democracy in the workplace Theories

  11. Law and Values View • Values in United States • Individualism • rights of individuals superior to other rights • property rights a derivative of individual rights • individuals free to order economic transactions so long as no laws are broken - freedom of contract • Corporations are Legal Individuals • Purchase and sale of labor an exchange transaction • Unions attempt to collective an individual transaction Theories

  12. Law and Values View (CONT.) • Values in U.S. and Law • Unequal status of employers and unions • conflicts between ind\property rights and collective rights usually resolved in favor of ind rights • “reserved rights” theory of management • Impact on IR System • Unions • Employers\Corporations • Product Market Theories

  13. ACTIONS ASSOCIATED WITH EMPLOYEE DISSATISFACTION • Economic View - Exit • Governance View - Voice Theories

  14. INDUSTRIAL RELATIONS SYSTEMS • OUTCOMES ARE RULES • PROCEDURAL RULES • SUBSTANTIVE RULES • HOW ARE RULES ESTABLISHED? • MANAGEMENT • GOVERNMENT • WORKERS HIERARCHY • MANAGEMENT-WORKERS • MANAGEMENT-WORKERS-GOVT Theories

  15. INDUSTRIAL RELATIONS SYSTEMS (CONT.) • ACTORS • MGMT, GOVT, WORKERS/ORGS • CONTEXTS • TECHNOLOGICAL • TYPE OF PRODUCT OR SERVICE • AIR TRAVEL • GEOG DISPERSION • VARIABLE HOURS, ETC. • MANUFACTURING (PAPER) • GEOG CONCENTRATION, • LONGER SHIFTS (ETC.) Theories

  16. INDUSTRIAL RELATIONS SYSTEMS (CONT.) • CONTEXTS (CONT.) • MARKET/BUDGETARY • SHELTERED • COMPETITIVE • LOCUS OF POWER IN SOCIETY • OUTSIDE IR SYSTEM • POLITICAL INFLUENCE OF UNIONS • CANADA - PARLIAMENTARY SYSTEM & NDP • U.S. - LINK TO DEMOCRATIC PARTY • EMPLOYER LINK TO REPUBLICAN PARTY Theories

  17. INDUSTRIAL RELATIONS SYSTEMS (CONT.) • WHAT ARE THE RULES • SUBSTANTIVE • COMPENSATION IN ALL FORMS • DUTIES AND PERFORMANCE OF WORKERS • RIGHTS OF WORKERS • PROCEDURAL • FOR RESOLVING DISPUTES • CHANGING THE RULES Theories

  18. INDUSTRIAL RELATIONS SYSTEMS (CONT.) • IDEOLOGY • A SET OF COMMON BELIEFS THAT HOLDS SYSTEM TOGETHER • ACTORS’ IDEOLOGIES MUST BE COMPATIBLE • EXAMPLES • EUROPE • CLASS LINES • COLLECTIVE WORKER ACTIVITY A NATURAL COROLLARY TO CLASS Theories

  19. INDUSTRIAL RELATIONS SYSTEMS (CONT.) • EXAMPLES (CONT.) • UNITED STATES • INDIVIDUALISTIC • LESS COMFORTABLE WITH COLLECTIVISM AND UNIONISM, ESPECIALLY IF IMPOSED ON UNWILLING INDIVIDUALS (FREEDOM OF ASSOC.) • A NECESSARY EVIL • COMPOSITIONAL ISSUES • WHAT IS GOOD FOR EVERYONE IS NOT NECESSARILY GOOD FOR EVERY ONE • SCOPE OF INCLUSION • EXTENSION TO ALL EMPLOYERS IN EUROPE • UNIT BY UNIT CHOICE IN U.S. Theories

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