a survey of labor relations in market economies

McGraw-Hill/Irwin Copyright ©2009 The McGraw-Hill Companies, All Rights Reserved.

A Survey of Labor RelationsIn Market Economies

Chapter Seventeen

17-2

Overview

Labor organizations vary Political activity Collective bargaining Decision making within societies, industries,

enterprises Organizational structures

17-3

Development of Labor Movements

European labor unions paralleled U.S. developments German unions in 1848 revolution Swedish in late 19th century British during same time, same manner as U.S.

Knights of Labor Only British resembles U.S. w/recognition obtained

at plant level and adversarial relationship at corporate level

Anarchists, syndicalists advocated revolutionary unionism

17-4


Early grounds for revolutionaries Germany – Karl Marx

Goals of union/state are synonymous Great Britain – Fabians in Great Britain, socialists

State ownership, planned economies to allocate wealth 1890s Sweden – Swedish Confederation of Trade Unions

(LO), 1900 Swedish Employers’ Confederation (SAF) Industry-wide agreements 1900-1910 after major strikes Conflict until 1930s when government turned to social

Democrats Japan – Unions in 1890s after industrial revolution

Marxist tendencies after WWII - low wages Became enterprise oriented

17-5


European unions increasingly capitalistic and free market

Unions in socialist economies expected to help meet production goals and maintain discipline

Transformed economy unionization high in state-sector, not in private-sector, where wages higher Fall of communism shifted governance from

employees to shareholders Ex-communists more egalitarian, low job

satisfaction, more strongly supported trade unions

17-6

Structure of Labor Movements

U.S. - Locus of power vested in national unions Not true in other free-market nations Most concentrate union control in labor federations or local level

Swedish power in the LO, deals with employers’ SAF Germany, small group of national unions handle bargaining British unions organize nationally, but locals retain authority Italy, France, Netherlands – political/religious national

federations Japan - bargaining at local, locals affiliate with national

17-7


Japanese union member activity predicted similarly to U.S. Length of membership Pay levels Dissatisfaction with pay/working conditions Interactions with others in work group Perceptions of union effectiveness and

democracy

Contrary to U.S., age/educational attainment negatively related, job status unrelated

17-8


Little rank-and-file member participation in European unions

Negotiated agreements in major industries often adopted by other employers Less motivation to join unions in Europe than

U.S.

France, union contract coverage very high Union membership lower than U.S.

17-9

Works Councils

Advise management on employment matters May be consulted in overall strategy of organization Operational conflicts between union and works councils

Councils more interested in plant interests than union interests

1994 European Work Council (EWC) directive passed Aimed to increase power of labor Requires transnational employers to establish works

councils with reps from all EU countries in which it operates

17-10

Globalization

Acceleration since 1980s Primarily manufacturing development from

state/foreign investments Asia, Eastern Europe, Mexico, Latin America

Regional trade treaties Increased pressure on trade unions,

reduced ability to gain wage increases due to competition

17-11

Globalization

Developing economies may adopt one of two approaches: Import-substitution industrialization

Limited growth implications – internal consumption limits Export-oriented industrialization

Require output be cheaper or of better quality than domestic products

Countries in first stage of EOI Containing costs, exclusion, repression, stability

Second stage requires increases in work skills/productivity/flexibility Repression ineffective; strikes likely to lead change

17-12

Globalization

Competition leads employers/state to find ways to attract investment Enhance labor’s effectiveness to benefit of capital

Political regimes choose to adopt regressive or benign policy toward labor unions Repressive likely when union could create political opposition

or when state has strong need for tapping the results of economic growth

Benign strategy, wage growth could reduce labor discontent, reduce unionization

Repressive regimes have encountered labor force problems while unions have had less success gaining wage increases

17-13

Globalization

Multinationals may be viewed as “villains,” “necessary evils,” “arm’s length collaborators,” or “partners.”

Authoritarian governments/unions initially opposed multinational investment

Shift in this view Argentina, South Korea, Spain

17-14

Organizing and Representation

Quite unlike U.S. Britain aside, EU members have no worker votes on

representation Unions recognized at national/federation level by

employers Bargaining happens at that level Exclusive representation uncommon Several unions in a workplace, different agendas

Union security differs Several unions may represent employees in “bargaining

unit”

17-15


Japan – enterprise orientation Difficult to take wages out of competition Direct effect on pay/benefits is small Lack of wage premiums unattractive to unorganized

workers Unions in decline in Asian nations Union density varies widely across Europe Quite low in US and declined more than in other

countries More adversarial relationship in U.S. Union wage premiums higher in U.S. Strong local EU unions associated with higher union

density

17-16


Mandatory membership not important in Europe No exclusive representation requirement in most

countries Probability of joining increases among recently

hired men in public sector with pro-union attitude, perceive benefits to outweigh costs, expect to use union services, who believe they have limited career mobility

Leavers likely to be women, older when joined, longer-term members, unemployed or changing jobs, non-union parents, having first child

17-17

Bargaining Issues

Bargaining Issues Broader/narrower outside U.S. No collective bargaining, issues/methods unspecified No distinctions between mandatory, permissive,

prohibited issues No legal duty to bargain, except in Sweden and France Work rules, seniority issues not in contracts, evolve from

tradition Substantial social legislation to handle redundancy

Different contract issues across countries

17-18

Bargaining Structures

Most bargaining at industry level using national unions/federations and employer associations

Increased economic integration across EU requires corporatist deals to pay attention to EU-wide targets

Industry-level bargaining with works councils enhances introduction of technological change Addressing redundancy

17-19

Bargaining Structures

Growing importance of multinational employers may lead to changes Local economic climates increasing competition

Information availability increasingly critical for labor and management

Increase multinational consultation Tendency to move from industry to local level

negotiations Variance between industrial countries relative to

bargaining level, degree of union coordination, labor federation involvement, and government involvement

17-20

Impasses

Incidence and duration of strikes varies across nations

Frequency negatively related to duration and intensity

Strike activity has declined substantially in every country except France and Spain

17-21

Union-Management Cooperation

Different mechanisms to enhance cooperation at three levels of decision making: Shop floor Core Strategic

17-22


Three category levels of involvement:1. Advisory

2. Collective bargaining

3. Codetermination

17-23


Variation across Europe regarding employee entitlement to information, consultation, participation Works councils legislated in most countries,

union involvement varies Employers must disclose information necessary

to unions for collective bargaining

Difference in cooperation across countries

17-24


Worker cooperatives more common in Europe than U.S. Employees own the firm, hire its managers, and

direct its strategy

Higher productivity, more labor-intensive production functions, low pay differentials between rank-and-file and managers, and more tranquil labor relations than private firms

17-25


Industrial democracy more developed in industrialized countries than in U.S.

Greater incidence of worker-owned cooperatives, input into managerial selection, other consultation of unions

17-26

Contract Administration

Large differences Bargaining structure differences Contract is basic agreement that plants or

employees can add to

Canada intra-contract strike law and binding arbitration

Germany works council disputes

17-27

Public Sector Unionization

Collective bargaining in international public-sector similar to differences among states in U.S. Level/practice depends on development of

private-sector unionism and friendliness of ruling political party

17-28

Comparative Effects of Unionization

Variety of changes in industrial relations from globalization Stronger focus at enterprise level Increased production and job assignment

flexibility Skill development Declining unionization

17-29


Investment by U.S. firms negatively related to union density, centralized collective bargaining, layoff restrictions, and contract extension policies

Positively related to education levels and works councils Suggests investors prefer to avoid instances where

bargaining power is reduced Prefer skilled workforces and institutionalized

methods for continuous conflict resolution and problem solving

17-30


UK – most adversarial system and decentralized bargaining Decisions made at firm or plant level Close to effects of unions in U.S. Investment rates of firms recognizing unions

23% below nonunion firms Introduction of EI programs linked to improved

firm performance in nonunion firms, but decreased performance in unionized firms

17-31


Germany – unions view themselves as cooperative Unionization related to lower productivity Unionization does not reduce proportional expenses of firms on

research/development or employment in those areas Japan – enterprise unionization has not influenced worker

satisfaction, but has reduced company commitment Korea – unionization increases wages, reduces turnover

Works councils increase employee satisfaction/productivity Productivity assisted by bonus policy, unionization decreases

a survey of labor relations in market economies

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