An analysis of imbalance of bargaining power

The relationship between employers and employees has experienced an activity from confrontation to concession and cooperation, from imbalance to relative balance during the past hundred years. In the early stage of commercial relations, owners of capital employed many wage labours to produce standardized goods in larger quantities for markets and employers and had absolute ascendancy over labour. However, financial transition and political democracy engaged in the late nineteenth and early twentieth century which promoted the unions' growth to a great extent. After World War II, more regulations and legislations were intended to standardize the actions of both parties. Consequently, large scale conflicts declined relatively and replaced by regularly organizational behaviours, such as collective bargaining and tripartite organization. Whereas union membership decreased and people were emphasize around 1970s. Although unitarists claimed that with a single way to obtain authority (management) and everything participants sharing the same goal, harmony and co-operation will be the predicted outcomes, it is still essential to take the pluralist assumptions into consideration in the labour market of the 21st century. There are four main assumptions in Pluralist, that are diverging interests within the employment relationship; an imbalance of bargaining power exists; labour should not be treated as a commodity; principles of equity and fairness are essential. However, bargaining power constitutes the most essential feature of the management-union relationship.

This paper presents a tactical method of the analysis of imbalance bargaining power in respect of union and individual level. Generally terms, the classic definition of bargain power is "the capability to exert influence, also to overcome resistance in obtaining a desired objective"(Rojot, Jacques. , 1991). In the management-union relationship, each party has power on the other: management gets the power to deduct wages and terminate employment contracts; employee has the capacity to withdraw work, effort or goodwill. Nevertheless, Adam Smith described in 1776:" It isn't difficult to foresee which of the two parties must, after all ordinary occasions have the advantage in the dispute, and force the other into compliance with their terms. Many workmen cannot subsist a week, few could subsist per month, and scarce any annually without employment. In the long run the workman may be necessary to his master as his master is to him, but the necessity is not so immediate". The statement evidently indicated the existence of imbalance of power between the employer and employed.

Generally speaking, the union and collective bargaining are named a counterpart of the employers rather than individuals. And unions significantly influence the bargaining process and the decisions created by employers by means of negotiation and strike. Concerning on the power in bargaining, the analysis of the surroundings is of primary importance, because it is from the surroundings that bargaining power issues. External environment and internal environment are two principal forces influencing the decisions and actions of both parties heavily. Several factors associated with external environment are the economy, the socio-political system, media and public opinion, and the wider professional relations system. The union party can get an edge in a certain history period, like in war; in a booming economy; in a supportive public opinion; in a backing from a solid and cohesive organization. Management will get an advantage in signed contracts or agreement; in a union that not united on a concern and on the utilization of professional action. Also, if government favours one side, it'll definitively have the edge on the other party. Management and unions are not the only real interested parties and, therefore, not really the only ones that can influence the results of negotiations. According to a report published in Business Week in August 9th 2004, the union of Chandler gave up 2. 8% salary raises and consented to lengthen working hours from 35 hours to 39 hours weekly to keep the 6000 employment opportunities in Germany in the next 8 years. The example illustrates that global economy brings impacts to negotiations between management and unions as well. Also, internal context could be divided into two parts, one part pertains to the management side and the other part pertains to the union side. Those on the management side include business/market conditions, business strategy and organization, and leadership goals and attitudes. Those on the union side include membership demographics and expectations, union organization, and leadership goals and attitudes to management.

These crucial forces heavily influence the way the parties take part in the process of negotiating and even decide the power of the engaged parties. As a result, it is implicit to summarize the bargaining power between employment and union is balanced or not in that changeable situation.

Comparing with bargaining power between management and union discussed above things may changed significantly relating to individuals. In most cases, following the World War II the industrial relations stepped into a new era along with the declining of large scale conflicts replaced by regulatory and organizational behaviours and rules; the declining density of unions which mainly in traditional industry sectors, such as coal, transportation and manufacturing due to the economy restructuring; and decentralization trend of collective bargaining. Meanwhile, the value of men and women themselves, its initiative and creative imagination for the efficiency of the organization is recognized gradually. People are the lifeblood of organizations, that could present one of its most effective resources. Managing people is one of the most difficult aspects of organizational management as it can be involved with people related problems and interests.

This difficulty largely results from the fact that individuals are inherently different physically and psychologically. And diverging interests do exist in both parties: the objectives of employees are various, such as income, security, satisfaction and career development, as the goals of the employers are high margin and low priced. The employment relations serves as a profit and wages, authority and compliance, which creates a persistent tension between employer and employed, management and workforce. However, employment is the side possessing capital and buying the working ability of employees by signing the contracts. Only once the goals of the employment are satisfied, will certain requirements of the employees be realized. Quite simply, by conducting and supervising the production process and creating a relationship of authority and compliance, the company will be well operated and then employees will obtain more welfare and promotion opportunities.

Concerning the reality of the employment market, the unemployment rate increased from 6. 1% in 1999 to 15. 1% (CSO 2009) in Ireland. It reveals a situation of employers displaying large amounts of bargaining power in the other. Suppose Erin, a graduated student, is trying to get employment at a xx Company, only 1 position can be obtained, and there are 100 different people applying for that same position. The business will have a lot of preference, and you will be able to offer Fri a standard form contract for employment, filled with minimum wage pay, nothing but workers compensation and unemployment as benefits. Obviously, it makes it more likely that the employer will gain more favorable terms. Therefore, the bargaining power of the average employee is weaker than employer undoubtedly.

In contrast, for a highly skilled and knowledgeable employee, the stake in bargaining may very enormously. Under the influence of Knowledge Economy, the knowledge capital and human capital act more significant role nowadays. The Human Resource Development Report in 1996 from United Nations Development Program claimed that, three quarters GDP of 1 country relied on its recruiting, while one quarter on its capital resources. As Backer notes, more than 75% capital in developed country is recruiting rather than physical capital. Intelligent folks present values both in economy and investment entitling them greater bargaining power with employer. It is this that lead to a member of family balance power between employers and employees.

The main overall conclusion concerning the bargaining power is a present division that between management-union relationship and employer-individual employee relationship. Inside the management-union negotiation, many other forces, such as economy situation, the socio-political system, media and public opinion, the professional relations system, and the internal organizations and goals, may heavily affect the attitudes, tactics, and bargaining power of the parties. Although it is claimed an imbalance exists in management-unions relationship, it is implicit to summarize the effectiveness of both parties' bargaining power in such a changeable situation. Alternatively, an average employee is normally reduced to relative inferiority, while a highly skilled employee particularly will get more chance and capital to negotiate with employers reaching to a member of family balanced bargaining power.

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