Executive Summary
After comprehensive evaluation of the implication of public sector unionization and collective bargaining, we find that these public sector employees were undercompensated than being overcompensated. This calculation also takes into account modest overpayment as low skill and educational level, and modest underpayment at high skill and educational level.
Next, it can be inferred that public sector bargaining units have worked well in reducing strikes and in achieving equitable outcomes. Though, care should be taken such that the arbitration process does not take long enough to cause hardship to parties involved. Regarding a response to financial crisis, there are several old and new examples where mutual gain negotiations and innovations have been effective in enhancing performance outcomes. A major challenge in this context is to sustain negotiations and innovations.
Introduction
The current political debate about the unionism and collective bargaining unit by public servants lacks empirical evidence about how it functions or generates results. There was no evidence either during the previous debate in the 60s. However at that time, the ideas were borrowed from the private sector. However, at this stage we have enough evidence about outcomes from collective bargaining unit and reflect on policy debate. Therefore, our effort here is to summarize critical arguments in the debate and gather evidence from public and private bargaining units. Therefore, there is a need for new empirical research to evaluate current policy options.
The debate began out of the realization that the public sector employees should not be denied the fruits of equity, and, therefore, should be allowed to unionize and form a collective bargaining unit. During the early part of these developments, the opponents of this approach raise three important objections. First, there was realization that as the public sector employees are not a position to shut down the operations, they’ll use this newly acquired power to demand wages higher than the private sector. Secondly, it was realized that the concept of collective bargaining was incompatible with the democratic setup as it will give allow union members to influence the decisions of elected leaders. It is likely that some of these elected leaders might use unions to get electoral support. Thirdly and finally, a specific concern was raised that a threat of strike to achieve their ends, will not only threaten a democratic government, but also bring to halt essential services.
At at that time there was little empirical evidence to analyze these arguments, the debate was largely around “theoretical, ideological, and partisan grounds”. Therefore, the focus of our current debate is to bring about empirical evidence about public sector unionization and collective bargaining, from past and current research. Hence, we try to answer the following four questions: (a) how does the compensation of public sector employees compare with that of private sector, and have they been compensated in ways that make them over-compensated compared to latter; (b) how have the dispute resolution processes worked in the context of strikes, reaching agreements, and affecting bargaining outcomes; (c) how have both the parties responded to financial crises, and whether they are unable to adjust their practices when situation demands or whether capable of negotiating adjustments in response to problems affecting public interest; and (d) in shaping future labour relations, what lessons can be learnt from private sector.
Next when public sector bargaining laws and policies were formulated, they were borrowed from the private sector with the exception of provision for strikes. Therefore, the dispute resolution process included mediation, fact-finding with recommendations, arbitration, or mix of them. Current evidence with regards to strikes points to the fact that they are more likely to happen in states where there is no bargaining law, and least likely to happen where there is bargaining law providing for binding arbitration. Further, penalties against strikes do act as a deterrent. Also, it was found that the policies outside the collective bargaining can affect strikes.
Regarding the ability to reach an agreement, fears have been expressed the outcomes once arbitration or fact-finding is invoked. It is felt that the concerned parties will continue to rely on them for future negotiations. However, the evidence suggests that such concerns are overstated.
Further, examining the effect of arbitration on the pay outcomes, we observe that; wages of public servants in states in which wages are covered with arbitration statues are not different from the ones in which they are covered. The impact on wage growth was similar, and wage increase as a result of arbitration was not different from what was a result of negotiation with invoking arbitration. At the same time, the time required to complete negotiations when arbitration has been invoked has increased significantly over the years.
Next, we move on to examining how public sector union and the management respond to the financial crisis and other pressures of change. Generally, the public sector bargaining is based on the role of the organization. So it has been observed that in times of crisis, unions and the management have had to work in a coordinated fashion. As a case in example, the New York City municipal government was able to avoid bankruptcy through negotiations with is numerous employee unions. As recently as 2009, the legislature of Massachusetts merged all the state’s transport agencies, workforces, and union into one single department of transportation. Along the same lines, the public sector employees of San Francisco have come to together to negotiate a pension plan and in Boston the healthcare reforms.
Currently, the U.S. public education system is in the need of reforms. So the plan put forward by the current administration, which builds upon the previous plan, focuses on improving quality of teaching by holding district boards and teachers accountable. Therefore, a key question is whether teacher’s union and school officials and the management will be partners or impediments to change. Most of the district boards have successfully negotiated a contract language, or memorandum of understanding, which will support their collaborative effort. This allows for integration of change in collective bargaining, and its institutionalization. Besides schools, there are numerous examples from other sectors.
Finally, we come on to the fourth point of learning from the private sector. Past three decades have witnessed transformation and innovation in management labour relations in the private sector. Various studies have shown a positive impact on performance, where investment in employee training and improvement in workflow process have incorporated ideas from the employees. For example, in manufacturing industry, the transformed non-union environment was more 10% more productive than traditional non-union environment. Further, the transformed unionized environment was 15% more productive that the traditional non-unionized environment.
These experiences within the private sector provide public sector with valuable lessons. First and foremost, these innovations in the private sector do see application in the public sector. It goes without saying that innovations will be required in the context of individual sector within the public sector. Secondly, as a wave of private sector innovation were a result of competition from within and from overseas, the drive for innovation in public sector will be due to fiscal and political pressures. Finally, there is a need to build institutions and policies to sustain initiatives in public sector labour management.
Other researchers have found similar evidence such as; bargaining units increase pay significantly; raise employment levels above what would have otherwise been given at union level; total general expenditure at municipality or government levels are not increased; and the effect of bargaining unit on pay levels of other departments is positive and significant, but on level of employment is negative and frequently significant.
Conclusion
After comprehensive evaluation of the implication of public sector unionization and collective bargaining, we now have a clearer picture of what needs to be done. Upon comparing the education, organizational size, and other relevant factors, we find that the public sector employees were undercompensated than being overcompensated. This calculation also takes into account modest overpayment as low skill and educational level, and modest underpayment at high skill and educational level.
In the context of dispute resolution, it can be inferred that public sector bargaining units have worked well in reducing strikes and achieving equitable outcomes. Though, there have been incidences where arbitration process has taken long enough to cause hardship to parties involved.
When it comes to responding to the financial crisis, there are several old and new examples mutual gain negotiations and innovations have been effective in enhancing performance outcomes. A major challenge in this context is to sustain negotiations and innovations.
Recommendations
In the above context, the research community will play a leading role in researching and guiding innovation, and continuously giving shape to public sector bargaining policy and practice. In summary, the current state of affairs poses as a challenge and an opportunity. The magnitude of which is same as that in the private sector. In the light of the fact that government cannot shut down operations or move it elsewhere, the elected official, management and labour leaders should step in accelerate the process of reforms. Otherwise, we are likely to see prolonged labour management conflict that will further erode employee voice and decline in quality of service. Education reforms in particular are likely to suffice in the absence of any movement forward. Besides that all other government services are at crossroads, with potential of prolonged conflict. Therefore, it is time for the research community to do innovative work and guide the policy makers in making key choices.
Bibliography
Lewin, D., Keefe, J., & Kochan, T. A. (2012). The New Great Debate about Unionism and Collective Bargaining in U.S. State and Local Governments. ILRReview, 65(4). Retrieved from http://www.americanbar.org/content/dam/aba/events/labor_law/2013/02/adr_in_labor_employmentlawcommitteemidwintermeeting/v.authcheckdam.pdf
Zax, J., & Ichniowski, C. (1988). The Effects of Public Sector Unionism on Pay, Employment, Department Budgets, and Municipal Expenditures. In R. B. Freeman, & C. Ichniowski, When Public Sector Workers Unionize (pp. 323 - 363). Chicago: University of Chicago Press.
