A Survey of Labor Relations In Market Economies

1. A Survey of Labor RelationsIn Market Economies Chapter Seventeen

2. Overview • Labor organizations vary • Political activity • Collective bargaining • Decision making within societies, industries, enterprises • Organizational structures

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

4. Development of Labor Movements • 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

5. Development of Labor Movements • 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

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

7. Structure of Labor Movements • 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

8. Structure of Labor Movements • 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.

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

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

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

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

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

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”

15. Organizing and Representation • 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

16. Organizing and Representation • 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. 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

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

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

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

21. Union-Management Cooperation • Different mechanisms to enhance cooperation at three levels of decision making: • Shop floor • Core • Strategic

22. Union-Management Cooperation • Three category levels of involvement: • Advisory • Collective bargaining • Codetermination

23. Union-Management Cooperation • 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

24. Union-Management Cooperation • 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

25. Union-Management Cooperation • 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

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

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

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

29. Comparative Effects of Unionization • 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

30. Comparative Effects of Unionization • 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

31. Comparative Effects of Unionization • 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