Trade Unions and Wages

12 Key excerpts on "Trade Unions and Wages"

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  Concise Encyclopaedia of Participation and Co-Management

  • György Széll(Author)
  • 2017(Publication Date)
  • De Gruyter

    (Publisher)

  Trade Unions The concept of trade unions Trade unions are part of the relationship between capital and labour. When, in the course of the historical development of capitalism, this relationship has acquired some stability groups of wage workers formed trade unions. They formed coalitions in order to defend their interests against capital within the framework of this relationship. Such coalitions can be impeded by political force and partly also by measures of repression by the entrepreneurs. But when the repression diminishes, the wage workers formed again trade unions. This demand for trade union organisation is closely linked to the fact that wage workers have in general no other possibility of subsistence than that of selling their work force. Thus their work force necessarily becomes a commodity. The interest of workers in subsistence, and more than that, in an existence worthy of an human being takes on for them forms which are derived from the commodity character of their work force. This constellation entails three fundamental interests for wage workers: the first consists in the possibility of selling their work force; it finds expression as an interest in finding a job and retaining it, in other words an interest in job security. This first interest logically rakes precedence over the others because it must be satisfied before other interests can be pursued. The second interest consists in the attempt to sell their work force as expensively as possible. The at least partial satisfaction of the interest in higher wages, in a higher income is necessary in order to guarantee the 'reproduction' of the wage worker and of his family and to permit a participation - however low it may be -in the wealth of the society. The third interest aims at the conservation of work force. The existence of the worker is the precondition for the sale of his work force. When he is young, the wage earner has the impression that his work force is unlimited.

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  Labor and the Economy

  • Howard M. Wachtel(Author)
  • 2013(Publication Date)
  • Academic Press

    (Publisher)

  CHAPTER 6 / TRADE UNIONS AND WAGE DETERMINATION 113 TABLE 6-2 Trade Union as an Economic Institution Inputs Internal Union Structures Outcomes 1. Unemployment rate 2. Industry structure: degree of product market competition 3. Orbits of coercive comparison 4. State of public opinion 5. Legislative, executive and judicial attitudes 1. Age structure of union members 2. Skill and occupational composition 3. Size of strike fund 4. Degree of internal union democracy 5. Union history, traditions, and leadership 1. Wage policy: a. wages vs. fringe benefits b. wage rates for different skills 2. Policy on working conditions 3. Allocation of union resources the allocation of the union's own resources, for example, the internal bud-getary allocations within a union—the amount of resources set aside for new organizational campaigns, for education of the union members, for the strike fund, and so forth. Table 6-2 summarizes the narrative just completed on the trade union as an economic institution. The trade union, viewed in this fashion, becomes a complex, large, modern institution that has to reach decisions based on a set of external and internal factors. Unions today manage large sums of money in pension funds (in conjunction with banking and other financial institutions) and even own and manage large banks, as, for example, in the case of the United Mine Workers, who own the National Bank of Washington, one of the largest banks in the nation's capital. Bargaining Model of Wage Determination Wages are determined through a process of collective bargaining for workers who belong to trade unions in the American economy. Many workers who are not members of unions receive wages that are influenced by the collective bar-gaining agreements established among unionized workers. Collective bargaining takes place within an atmosphere of conflict. Negotiations are influenced by conditions in the labor market, but the collective bargaining process filters those

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  Understanding European Trade Unionism

  Between Market, Class and Society

  • Richard Hyman(Author)
  • 2001(Publication Date)
  • SAGE Publications Ltd

    (Publisher)

  One of the strongest objections to this view was articulated by Selig Perlman (1928). His argument was that American unionism, with its concentration on directly job-related issues, displayed greater maturity than its more politicized European counterparts. Effective trade unionism was a means of collective response to the economic vulnerability described by the Webbs, pursuing workers’ aspirations ‘for a decent livelihood, for economic security, and for freedom from tyranny on the part of the boss’ by securing their common ‘job-territory’ (1928: 273–4). The pursuit of limited but attainable economic objectives, attuned to workers’ direct experiences in the labour market and at work, was for Perlman the only basis for stable trade union organization.

  Much academic analysis has shared the conception of trade unions as primarily economic actors. ‘The standard view of trade unions is that they are organisations whose purpose is to improve the material welfare of members, principally by raising wages above the competitive wage level’ (Booth, 1995: 7, 51). The establishment of collective organization and the conduct of collective negotiations enhance workers’ bargaining power, which in turn – according to theoretical and political standpoint – either redresses the imbalance of market power between employer and employee, or constitutes a form of monopoly which distorts the optimal functioning of the labour market. From a conventional economic perspective, unions as economic actors must be seeking to maximize some outcome: but what? In a famous early attempt to answer this question, Dunlop (1944: ch. 3) concluded that a union would seek to achieve the largest possible wage bill (numbers employed times average wages) in the sector of the economy which it organized.3 Later writers have offered a wide range of variants on this theme (Booth, 1995).

  Is there a Labour Market?

  ‘The theory of the determination of wages in a free market is simply a special case of the general theory of value. Wages are the price of labour; and thus, in the absence of control, they are determined, like all prices, by supply and demand’ (Hicks, 1933: 1). Yet is labour really a commodity like any other? And indeed, can there be such a thing as a free market?

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  Limits of Bargaining

  Capital, Labour and the State in Contemporary India

  • Achin Chakraborty, Subhanil Chowdhury, Supurna Banerjee, Zaad Mahmood(Authors)
  • 2019(Publication Date)
  • Cambridge University Press

    (Publisher)

  In other words, the proportion of workers reporting the absence of trade unions in their enterprises has increased, but this proportion remains less than the all-India average. Given that, at the macrolevel, trade unions are not being able to safeguard the interests of the workers, in terms of protecting their real wages, is there a premium in terms of wages and non-wage benefits for workers joining the trade unions compared with those who are not joining them? In other words, at the microlevel, is there a premium for joining the trade unions? We now turn towards answering this question. Is there a wage premium for joining trade unions? If one subscribes to the neoclassical approach, then one assumes wages and profits to be determined according to the marginal productivity of factors, interference with which might lead to efficiency and welfare losses. The classical tradition of Marx and Ricardo sees wages as fixed at a particular level, which may or may not be tied to some strict notion of physical subsistence. If one believes that wages and profits are determined according to the relative bargaining powers of both sets of economic actors, then the role of unions becomes an important determinant of the level as well as the share of wages. The role of labour unions in influencing the share of wages has long been recognised by writers such as Michal Kalecki and Joan Robinson. Even neoclassical theories of trade unions recognise that unions play a role in determining wages, employment and employment conditions. The purpose of our analysis is to investigate whether by being members of trade unions workers can receive higher wages compared to their non-unionised brethren, without going into a detailed discussion about the merits and demerits of various theoretical approaches towards analysing trade unions and wage determination.

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  The Economics of Imperfect Labor Markets

  Second Edition

  • Tito Boeri, Jan Ours(Authors)
  • 2013(Publication Date)
  • Princeton University Press

    (Publisher)

  Some-times unions also coordinate across countries, as in the case of the European Trade Unions Confederation. Because of the interests of their members and their ideological roots, unions tend to pursue egalitarian wage policies, reducing wage differentials by education and skill level. At the same time, what unions do affects their membership. Unions are generally not very successful in recruiting highly skilled workers and seem to be aging more rapidly than the workforce, which points to growing difficulties in involving young people in the activities of unions. Trade unions typically bargain over all aspects of an employment contract: wages, working hours, overtime pay, fringe benefits, employment security, and health and safety standards. They negotiate with employers on a collective basis, overruling (when incompatible with the collective agreement) or complementing 63 individual contracts. By coordinating wage claims of a plurality of workers, unions force employers to pay for labor services at a rate above the reservation wages of otherwise uncoordinated individuals. The bargaining power of unions is related to the extent of wage coordination that unions achieve and to the coverage of the collective contracts signed by the unions. 3.1 Measures and Cross-Country Comparisons Unfortunately, not much effort has been spent to date on developing cross-country-comparable measures of the influence of trade unions. This is because unions are reluctant to provide reliable figures on their membership, and surveys may not be accurate in eliciting membership, because workers may not be keen to disclose this information. Available data suggest that the presence and influence of trade unions vary considerably across countries and have changed quite dra-matically over time.

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  Comparative Employment Relations

  France, Germany and Britain

  • Susan Milner(Author)
  • 2017(Publication Date)
  • Red Globe Press

    (Publisher)

  67 Chapter 4 Trade Unions in and Beyond the Workplace 4.1 The role of trade unions Traditional approaches to industrial relations placed the relationship between trade unions and employers’ organisations (and, in some but not all countries, the state) at centre stage. Trade unions are associated with three main economic and social functions: first, they provide benefits for their members, originally through the organisation of mutual insur-ance funds or craft apprenticeships; second, they engage with employers through formal and informal institutions, notably collective bargaining, in order to represent and promote their member’ interests and secure a ‘wage premium’ for members; and third, they represent their members’ interests by campaigning for legislative change (Sisson, 2011, p. 266). Their role in employment regulation through collective bargaining is seen as providing an employee voice function which can also be of benefit to employers (Freeman and Medoff, 1984). It is also argued that unions provide a valu-able service to members, and more broadly to the wider workforce and society, by promoting safety standards in the workplace and in products and services (Donado and Wälde, 2012). However, decreasing union membership since the 1980s, accompanied by the erosion of collective bargaining (as we shall see in the next chapter) and the union wage premium, has shifted the focus of academic study of employ-ment relations towards the workplace and individual employer-employee relations. Within the EU, aggregate union membership fell from 46 million to 43 million between 2000 and 2008, whilst the number of non-unionised employees rose from 120 million to 140 million (Visser, 2011, p. 25). This trend has been visible for some time; by the late 1990s, trade unions were already being described as ‘hollow shells’ (Addison et al, 2010; Hyman, 1997; Millward et al, 2000).

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  Russian Trade Unions and Industrial Relations in Transition

  • S. Ashwin, S. Clarke(Authors)
  • 2002(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  Trade union leaders are easily convinced that the enterprise cannot afford to pay a living wage, while the threat of redundancy inhibits workers from pressing wage demands in depressed enterprises, so that 'exit' prevails over 'voice' as high rates of labour mobility enable the more skilled and enterprising to get higher wages by changing jobs. In this context, trade union leaders see the most effective method of increasing wages, or even getting wages paid at all, to lie in the traditional forms of collaboration with the employer in the attempt to increase production, improve quality, expand sales and by lobbying local and national government for support. Such an approach was expressed by Yevgenii Makarov, then President of the Leningrad and Saint Petersburg Trade Union Federation, in his speech to his regional trade union conference in March 2000, in which he said 182 Trade Unions and Industrial Relations in Russia A breakthrough in wages - that is our historical mission. This is where we have to show ourselves. It is very difficult work. At every enterprise, it is necessary to keep abreast of the state of affairs in the economy, to study and to carry out measures to increase the economic efficiency of the separate enterprises, to keep and to create new jobs. The metallurgical trade union in Sverdlovsk has made the revival of socialist competition a priority direction of its activity, now called 'economic rivalry', one of its officers explaining, We have to resolve socio-economic questions. We watch how production is doing. If there is no production there will be nothing to distribute... our task is production, to participate through the system of trade union activists. We must help in the development of production. Employment protection The trade unions have seen a halving of their membership over the 1990s, associated with the collapse of employment in the traditional sectors of the economy.

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  Theory of Union Bargaining Goals

  • Wallace N. Atherton(Author)
  • 2015(Publication Date)
  • Princeton University Press

    (Publisher)

  Unions also seek to advance their members' interests in other ways: for example, by securing favorable legislation. But this and certain other aspects of trade unionism lie beyond our concerns. We turn now to a survey of some of the existing theory of the union and to the selection from it of those elements which we shall incorpo- rate in our own analysis. Let us start with the idea that unions are interested in the wage rates which their members receive. In theorizing about union be- havior, many writers have found it useful to suppose that unions are interested only in wage income, and that they are concerned with a single rate rather than with a long list of rates pertaining to various occupational and other categories of labor. For the time being, we shall make use of this simplifying assumption. It will be helpful to think of a union which bargains about a single money wage rate paid per unit of time (rather than per unit of output), to suppose the work- week to be fixed in length, and to ignore the many other variables about which actual unions formulate policies and bargain. Workers, and the unions which represent them, may be presumed to prefer more wages to less. Is there any upper limit to the wage rate 6 REVIEW OF THE LITERATURE a.union might seek? Economic theory suggests an obvious reason for supposing that there is one. The quantity of employment available to the workers which the union represents varies inversely with the wage rate. Given the technological possibilities known and available to the firm, the prices of inputs other than labor, and the state of demand for the firm's output, higher wage rates will operate to reduce the quantity of labor demanded in two ways. First, higher wage rates mean higher costs, and these in turn imply ordinarily a reduction of the rate of output at which profit will be at a maximum.

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  Globalisation and Labour Market Adjustment

  • D. Greenaway, R. Upward, P. Wright, D. Greenaway, R. Upward, P. Wright(Authors)
  • 2008(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  3.2.3 Trade and wages in unionised labour markets In a related strand of theoretical research, models with imperfectly com- petitive product markets and unionised labour markets seek to uncover the mechanisms whereby reductions in trade barriers affect the capac- ity of trade unions to influence collective wages. Motivated by the spectre that deeper international economic integration may induce trade unions to engage in a ‘race to the bottom’ in wages, a burgeoning body of academic research investigates this issue by nesting elements of various economics sub-disciplines (labour, industrial and international economics) into a single theoretical framework. The literature that has so far gained most popularity explores the impact of trade liberalisa- tion on union wages by means of one-sector, two-country models, with oligopolistic competition in the product market and union wage setting in the labour market. Initial theoretical efforts along these lines appear to bear out the ‘race to the bottom’ hypothesis: Huizinga (1993) and Sørensen (1993) both show that the wage level is lower under free trade than under autarky. This is because, although market expansion as a result of product market integration causes wages to rise, this is more than offset by the increased product market competition which serves to moderate wages. Naylor (1998, 1999) argues, however, that the conclusion that integration leads to wage reductions is a special case, and results from a comparison of polar ends of the possible range of trade regimes. To show this, Naylor considers the process of integration as a marginal reduction in trade costs. 36 Globalisation and Labour Market Adjustment He shows that the movement from autarky to two-way trade is triggered when the unions in the two countries find it optimal to abandon their previous high wage strategies, and instead lower their wage demands in order to allow their firms to compete internationally.

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  Fair Shares

  Unions, Pay, and Politics in Sweden and West Germany

  • Peter A. Swenson(Author)
  • 2018(Publication Date)
  • Cornell University Press

    (Publisher)

  5 In the Swedish case, the unions generally came to embrace supra-industrial bargaining, which created the opportunity for broad-scale leveling while neutraliz-ing the inflationary wage rivalry and wage scrambles whose resulting high pay increases endangered the small, open economy. To make sense of these phenomena, we can distill yet another un-easy triangle of relationships. In this chapter, I argue that unions' objectives in (i) internal leveling (structuring pay within a union or confederation), (2) external leveling (either by increasing the wage share with respect to profits or by compressing interunion or interconfedera-tion pay differentials), and (3) full employment stand in a systematic relationship of conflict. With wage regulation in collective bargaining, union leaders simply cannot achieve improvements in all three areas at once. At any one time, the best they can do is make progress toward two out of the three—at the expense of the third. The analysis of this wage policy trilemma describes a set of power-ful market and power constraints that unions face as agents in the moral economy. From the trilemma we can derive a fuller picture of union interests in shaping the political economy as a way of strengthen-ing their position in the moral economy. A political economy is a pat-tern of state-society interaction in which interest groups and coalitions obtain government market-shaping policies that help those organiza-tions maintain both internal authority and coalitional unity. As seen earlier, wage distribution figures prominently in the development of centralized unions and their cross-class coalitions with employers for 5 Ross, Trade Union Wage Policy, p. 48. Sidney and Beatrice Webb cite the case of the flint-glass makers in Yorkshire who in 1895 negotiated cutbacks in piece rates in ex-change for rate standardization. Industrial Democracy (London: Longman's, Green, 1902), 280-81.

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  Labour Economics

  • Stephen W. Smith(Author)
  • 2003(Publication Date)
  • Routledge

    (Publisher)

  281 Layard et al. (1991) report that when it comes to explaining changes in unemployment rates across 20 countries during the period 1983–8, the bargaining framework (collective bargaining coverage, union co-ordination and employer co-ordination) especially employer co-ordination, plays a significant role (see Layard et al., p. 55). The implication is that differences in the unemployment rates of different countries are partially due to differences in the wage bargaining institutions of different national labour markets. THE ECONOMIC IMPACT OF UNION POWER In this section we give concise summary analyses of the effects of trade union power on national output, productivity, profitability, wage inflation, strike activity, and perhaps most importantly, the part played by unions in generating unemployment. Figure 7.12 On output The standard analysis of the impact of the power of unions to push up wages for their members on national income is usually based upon the monopoly union variant of the right to manage model. If unions alter the structure of wages, this will change the allocation of labour between unionised and unionised firms. Lower employment in the unionised sector will result in a reduction in the value of aggregate output, even if the overall level of employment throughout the economy remains unaffected. To understand this conventional prediction consider Figure 7.12 which is drawn from Rees (1963). This portrays an aggregate labour market split into a unionised sector (u) and a non-unionised sector (n). L S is the total supply of labour which for simplicity is assumed to be fixed. D t is the total demand for labour, which intersects labour supply to determine an initial market clearing wage W 0. However, the demand for labour has two components, D u the demand for union labour and D n the demand for nonunionised workers, with D t being the horizontal sum of D u + D n

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  In Defence of Labour Market Institutions

  Cultivating Justice in the Developing World

  • J. Berg, D. Kucera, J. Berg, D. Kucera(Authors)
  • 2008(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  However, the adverse employment effect of an increase in wages can be reduced and even be reversed if (a) unions and firms bargain 166 In Defence of Labour Market Institutions over wages and employment and agree on what is called ‘efficient contracts’ 86 or (b) firms have monopsony power in the absence of collective bargaining. Some empirical evidence on whether unions and firms bargain over employ- ment suggests that this is rarely the case in either the United Kingdom or the United States. 87 In the United States, many contracts explicitly state that the right to determine employment remains with the management. While this is not true in the United Kingdom, British unions do not generally bargain over employment. However, although the employment level per se is not subject to formal bargaining, recruitment, staffing norms, redundancy pay and deployment can be included in formal bargaining, and this can have indirect effects on employment. 88 It is possible to test econometrically the right to manage model (unions push up wages and reduce employment) against the efficient bargaining model (unions push up wages and employment). 89 The results often reject both models and one is tempted to conclude that ‘on the whole neither theory seems to be able to account satisfactorily for the data on negotiated wages and their associated employment levels’. 90 Although it is tempting to argue that the truth should lie somewhere in the middle, the clear answer may be constrained by data limitations and flawed econometric procedures. 91 Another way to assess the impact of unions on employment is to consider employment growth, noting that permanent employment growth differ- ences between unionized and non-unionized firms are unlikely to represent long-run equilibrium positions. With this in mind, the available evidence from Canada, Jamaica, Malaysia, the United Kingdom and the United States suggests that employment grows more slowly in unionized firms than in non- unionized ones.

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