Under the industrial relations between employers and trade unions, bargaining power refers to the relative ability of the parties to influence each other's positions by inflicting costs on one another and minimizing the effects of a labor action on members (Dau-Schmidt & Ellis, 2010). Either way, there is always that party -employer or union - which possesses a greater bargaining power based on certain demographic, technological, social, and economic factors or conditions working in their favor (Katz, Kochan, & Colvin, 2015). The purpose of this report is to assess which party between the employer and the union has greater bargaining power and the reasons for this from the given scenarios. It will also describe how the relevant external and internal inputs have shaped the bargaining relationship of the union and the employer.
Employment and Labor Relations: Company A
In this particular scenario involving Grocery-Right and the Union, the party which has the greater bargaining power is the Union because there are various factors that work in its favor and leave the company vulnerable should it reject the Union's terms. One of the factors which make the employer weaker compared to the union is the fact that it operates in a highly competitive product market and in an industry where consumers discriminate products primarily based on price. According to Dau-Schmidt and Ellis (2010), one of the economic factors that affect a firm's economic power is the nature of its products. Thus, the company is rendered in a weaker position in terms of its ability to bargain effectively. Further, the current competitive job market in Alberta means that if the company's employees go on a strike, it is not certain whether it will find replacement workers.
Examples of the external and internal inputs that have shaped the relationship of power of the employer and union include the availability of replacement workforce, the size, and quality of the labor force, the level of competition in the industry or market, and consumer habits and preferences. From the facts, it is provided that the market in which company A operates is very competitive. Competition being an external factor influences the ability of the employer to bargain well with the union since its decisions are affected by how the market will respond. Further, consumer behavior shapes the employer's bargaining power since it is forced to bargain with the union and accept its terms to avoid consumers patronizing its competitors due to high prices. Also, the lack of a replacement workforce in Alberta means the company cannot replace employees who have gone on strike.
Employment and Labor Relations: Company B
In this case, the party with the greater bargaining power is the employer because as its labor relations executives indicate, they have always had positive experiences with the Unions. Further, Company B has a diversified line of durable industrial products and is horizontally integrated such that if one plant has a strike, the other plants are not affected and can compensate for the lost production. According to Katz et al. (2015), a firm's market power greatly determines its bargaining power. Also, it also received only a limited amount of competitive pressure from other manufacturers meaning that its grip on the market is strong and cannot be easily cowed by the union to accept its terms.
The internal and external input factors that have shaped the bargaining relationship of the union and employer are thus horizontal integration, lack of stiff market competition, its wage parity policy, and diversification of production. The company's horizontal integration ensures that production is not affected even if a section of workers in one plant go on an industrial strike, hence enabling it to compensate the lost production. This way, the employer has an upper hand with the union since it does not have to worry about any threats of industrial strikes organized by the union. Furthermore, its wage parity internal policy helps in ensuring consistent wage and benefits for its employees across the country, hence it does not have to worry about employees going on a strike. Also, the fact that PowerCo has diversified its product lines means that each plan can conduct negotiations separately which gives it more power vis-a-vis the union.
Employment and Labor Relations: Company C
In this scenario pitting ChemicalCorp and the Union, the party with the greater bargaining power is the Union since the company is only two-thirds unionized and its profitability is reducing. Despite being a large capital-intensive industrial chemical company with numerous plants across Canada, the company still faces some competition and its union avoidance policy is likely to work against it at the negotiation table. Additionally, it the company as an employer has less bargaining power as compared to the union because given its high level of capital intensity, strikes are extremely costs and hence its executives will agree to almost everything offered by the Union to avoid strikes.
Some of the internal and external inputs that have shaped the bargaining relationship of the employer and the union include its high capital intensity, the high number of employees, union avoidance policy, competition pressure, and reduced profitability. Given the size of its workforce and capital intensity, the company is placed in a position whereby it cannot make any decision that will result in workers going on a strike, hence giving the Union more leverage. According to Kim (2014), the main sources of Unions' bargaining power are effective threat of strike and collective bargaining; hence, in this scenario, the union derives its power from the fact that it has an upper hand in collective bargaining and can effectively threaten the company with a strike due to its high number of employees and precarious situation.
To summarize, the bargaining power of the employer and union in these three scenarios is shaped by various factors including the level of competition, the size of the labor force, consumer behavior, internal policies, and the prevailing economic conditions. The relative bargaining power of these two parties is also determined by macroeconomic, technological, legal, and demographic factors that may be beyond their control.
Dau-Schmidt, K.D., & Ellis, B.C. (2010). The relative bargaining power of employers and unions in the global information age: A comparative analysis of the United States and Japan. Indiana International & Comparative Law Review, 20, 1-20
Katz, H. C., Kochan, T. A., Colvin, A. J. S. (2015). The role of the economic, technological, and demographic environments. In H.C., Katz, T.A., Kochan, & A. Colvin (Eds.), Laborrelations in a globalizing world (pp. 79-101). Ithaca, NY: ILR Press
Kim, L. (2014). What makes unions strong? A network perspective on union bargaining power. (Master's Thesis). Retrieved from https://digital.lib.washington.edu/researchworks/bitstream/handle/1773/25433/Kim_washington_0250O_12844.pdf;sequence=1
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