Introduction
Business organization has a central goal of profit maximization and increase in their productivity at the least possible cost. As a result, employers oftentimes tend to do everything it takes to get what they want. This includes subjecting employees to undue work pressure and probably denying them of certain benefits. Too often than not, this creates an unrest and conflict in the workplace which in turn affects the productivity of the employees. This is where labor unions, also known as trade unions come in the workplace environment. The sole purpose of labor unions is to act as a middleman between employees and the employers. They represent and convey the wills, needs, and demands of the employees to the employers and convey their interest. However, relevant labor unions appear to be the question of their efficiency and ability to provide a balance of power between the two respective parties involved calls for utmost consideration.
The purpose of this paper is to examine the ability and efficiency of labor unions in the workplace. More so, their ability to ensure that power does not tilt to one side or become unbalanced and to ensure the mutual benefit of both the workforce and the management is also considered.
Labor Unions
Muya and Simotwo defined trade union as an organization of workers who come together to achieve mutual goals such as protecting the integrity of its trade, achieving higher pay, improving safety standards, and benefits like retirement and health care, increasing the number of employees which an employer assigns to complete the work and enhances the working condition. In other words, a trade union is a continuous association of wage earners so as to sustain and improve conditions in the workplace. Of course, a plethora of benefits can be associated with trade unionism (Martinez, Fiorito and Ferris 132-142; Muya and Simotwo 2319-7064). Deakin and Morris pointed out that specifically, trade unions negotiate for wages, complaint procedures, work rules, rules governing hiring, firing as well as the promotion of workers, benefits, workplace safety, and policies. However, it can also be observed that trade unionism came with some negativity. Evidently, activities like strikes, slow-downs or work stoppages that mostly occur in developing countries are due to trade unions. Most employers opine that trade unions are mostly preoccupied with workers’ rights and do not put into consideration their obligations to the companies (Muya and Simotwo 2319-7064).
Labor Unions’ Ability to Improve Efficiency of Labor or Productivity
Trade union has an obligation not only to conflicts and issues involving management and workforce but also employee to employee. The union's membership is made up of employees and workers from various organizations that share a common goal. Jurevičiūtė explained the effect of labor unions on productivity with the collective action theory and the industrial democracy theory. The collective action theory simply explains the reason for the existence of the union whereas the industrial democracy theory explains the necessity of collective voice. Careful study of the impact of the labor union on productivity will show contrast from various scholars. Scholars argue that by resisting technological improvement that may replace labor force, misallocating labor force and setting up safe working contracts which may turn out to restrict employers to lay off workers when necessary, labor unions may negatively influence productivity (Autor, Kerr, and Kugler F189-F217). Moreover, Sherk argued that labor unions perform their function as labor cartels. They drive up workers' wage by limiting the number of workers in an organization or industry. A good example of this is OPEC that attempted to cut the supply of oil in order to hike the price. In addition, unionism basically benefits its members but hurts consumers and workers who are used to repudiate job opportunities.
Belman critically considered the question of who pays for union gains. Most authors and especially employers fear that consumers are forced to shoulder the increase in prices and consequent lower consumption. More so, some other schools of thought believe that those unable to join unions are thrust into sectors with lower wages and decreased employment security and yet another school of thought opine that the capital owners bear the brunt of the storm by receiving reduced returns from their investment. Perhaps, the right answer could be that the union workers themselves earn their wages and benefits through an increase in productivity.
Belman explained that the decades of quantitative research point hands to some important facts. Firstly, it should be noted that unions do not of themselves lower productivity, in contrast to what neoclassical economists opine. As a matter of fact, most studies associate unionism with an increase in productivity in the industry or firm. Even in situations where no positive effects are found, there is either no effect or a negative effect linked with poor labor relations climate (Belman). Abolade also supports this claim by emphasizing that unionization does not determine efficiency in the workplace and non-unionized workers in any establishment could aid organizational efficiency. Efficiency in an organization can be better improved via participatory management style and excellent reward system as this would encourage workers to perform optimally (Abolade 19-29).
Furthermore, Belman explained that organized firms have a lower rate of profit than nonunion firms. This is a somewhat negative relation associated with unionism, and it can be observed in most of the data analyzed. The impact of unions on firm performance is largely determined by the prevailing environment regarding labor relation. The relationship between workers and the management in an organization go a long way to determining whether unions can improve or degrade performance. In general, unionism when well-practiced should aid in improving productivity, and this mitigates negative consequences cited by most economists such as higher prices and lower employment. As a matter of fact, the effect of the higher prices and employment cited by most authors are generally small. Interestingly, the study indicated unionism in itself does not affect productivity, but the handling of conflict does (Belman).
Irrespective of the fact that employers and employees share similar interest, they also have legitimate differences. Conflicts of various sorts occur in workplaces. Moreover, the firm performance is regulated by the institutions and procedures for managing conflict that governs employee and managerial behavior. Obviously, productivity and efficiency decline in low trust or high conflict environments which are often characterized by work stoppages, dissatisfaction because such environments are not conducive for employees. However, the effect of unionism in such environments become pronounced as it leads to the development of trust, placing emphasis on problem-solving and respecting the divergent and conflicting interests of the parties. Such joint interest will provide an enabling environment for the implementation of job practices, new technologies, employment relations and management structures.
In addition, Voos outlined that unionism is necessary today to solve the problem of economic crisis and the probable wide chasm between the rich and the middle class. He argued that the middle class would be a major beneficiary of favorable income distribution due to increased union organizations. Evidently, the middle class is an important group of the nation's consumer and therefore enhancing their purchasing power will once again allow them to afford to buy automobiles, homes and so forth (Voos). Furthermore, he cited that America’s prosperity and consumer boom of the 1950s did not occur by accident. This is a period of unequaled expansion in the middle-class, increase in business growth, increased home ownership, rising consumer spending and so forth. Interestingly, this important period followed a sustained expansion in unionization ever recorded in the history of the United States.
Evidently, the notion that unionization is harmful is a misguided one (Voos). Unionization is essential in fostering economic recovery because the future economic stability depends on the middle class and this class of people has sufficient power to sustain the economy. Needless to say, unionism is mostly essential in time of recession. The misconception in the effect of unionism on productivity is largely due to the fact that this effect is much pronounced where there is a good relationship between the labor and the management. However, in a high conflict situation unionism is not likely to improve productivity (Belman).
Numerous successful unions that have helped in improving productivity in the workplace were cited by Belman. These include the Amalgamated Clothing and Textile Workers and the Xerox Corporation, the United Food and Commercial Workers, the A&P Corporation and so forth. Moreover, union workers were shown to be between 36 percent (value added) and 37.8 percent (square footage) more productive than nonunion workers in office construction. Unions can further achieve improved efficiency and productivity in the workplace if they would succeed in achieving wage differentiation over non-union workers. Evidently, organization's response to increasing in wage would likely be increased in the capital intensity of production and extensive engagement of employees making them more responsible. This, in turn, would lead to increase in productivity and efficiency in the organization (Booth).
Additionally, labor unions help in ensuring labor stability. This is achieved through effective communication. Unions serve as a collective voice that informs authority about the employees' preferences and problems related to work and negotiates favorable conditions as well as establish compliances. This kind of communication leads to increase in productivity. The collective voice also provides a common ground for workers formally to express their opinions and complaints about the production processes and working conditions.
Maintenance of Peaceful Work Relations
Muya and Simotwo reported that labor unions in the Kenyan public universities use labor relations as a conflict management tool and to enhance the harmonious work environment. Moreover, most trade unions go a long way in ensuring that their members maintain peaceful work relations and efficient work performance by drawing clear job specifications. As pointed out earlier, the procedure of conflict management at workplace determines whether or not efficiency will increase or decline in the workplace and not labor unions themselves. However, labor unions can influence efficiency by employing necessary tools to ensure the existence of harmonious work relations. One important aspect that needs to be clearly addressed in order to further promote increased productivity and peaceful work relation in a unionized environment is the communication of job specifications. The issue of loyalty also leads to a lag in efficiency. Freeman and Rogers cited a Worker Representation and Participation Survey (WRPS) that showed that workers had greater loyalty to their firm than they felt the firm had on them. In the survey, 56 percent of the workers indicated that they felt a lot of loyalty to their employers while only 38 percent trusted their management to keep its promises to them. Moreover, 63 percent of the workers surveyed indicated that they more influence than they had over decisions in the workplace and only 35 percent preferred to keep things in an existing way without any change. Unionism can help solving this issue of loyalty and sharing of power in a workplace by establishing contracts and compliances and giving formal voices to the workers and in turn, this will boost productivity in the workplace.
Trade Unions and the Balance of Power in Workplace
In an unregulated work environment, employers tend to exert too much power on their workforce. According to Freeman and Rogers, from 1996 to 2005, the survey research firm named Peter D. Hart Research Associates asked the public whether management had too much power compared to workers or vice versa. The report pointed out that the percentage that said management had too much power over workforce increased from 47% to 53% during period of 1996 to 2005, those who judged the relationship to be fair declined from 41% to 36% in the respective duration, but only 7% said that workers had too much power in the same duration. Obviously, the imbalance of power that exists at most workplaces is not debatable.
Unionization is one of the key ways of solving the issue of power imbalance in a workplace. Wright pointed out that unionization is a way of solving the issue of imbalance of power, and this can be achieved by creating some semblance of equality in bargaining over the employment contracts. This is usually successful where unions are strong because employers must come to a collective agreement with workers through the unions else the unions would deny the employer access to the labor force. Interestingly, this presents a ground by which workers would be able to punish employers if they fail to agree to a satisfactory contract, and they do so by collectively refusing to work. Subsequently, this is termed strike. Collectively, this could be a very potent tool in the hands of the workforce. Employees would do little or no harm by refusing to work because it has been proved that employers feel little or no harm when an individual employee quits a job, the employees usually bear the brunt of the storm. However, collective refusal to work is obviously a threat to employers, and it creates a good platform for labor market bargaining. This often leads to contractual terms that are more favorable to workers. Evidently, labor unions are vital instruments in creating a balance of power in a workplace and of course rectifying the issue of power imbalance. Unionized workers tend to have more benefit than nonunionized workers. This benefit is termed wage-premium (Wright).
Besides unionization, power imbalance in the labor force can be regulated via government’s imposition of regulations on the labor contracts. This will go a long way in reducing the ability of employers to dictate the terms of the agreement. Developed capitalist countries have this kind of regulations and examples of such regulations include minimum wage rules, health and safety rules, rules governing working hours and overtime and so forth. These rules assume that if left on their own, employers would offer jobs below the minimum wage, with poor working conditions and excessive working hours. Of course, most workers are vulnerable and might accept jobs under such poor condition and hence constituting an imbalance of power (Wright). However, in some developing countries, most of these government regulations are not imposed on corporations and even when imposed, they are not enforced. As a result, in such work environment, the power imbalance is well pronounced. Labor unions appear to be a very vital force in regulating such imbalance.
Two side functions of labor unions
Labor unions do not only seek the welfare of their members, but also ensure peaceful work environment and maintain the power balance in a workplace. They also monitor the performance of their members (the employees) on the behalf of the employers. This is one way in which labor unions help in boosting productivity and efficiency in a workplace. By monitoring their members, they ensure that the members meet the rules and regulations governing the corporation and the union and also ensure that the member delivers his duties to the company appropriately.
Pencavel pointed out that a strong labor union carries out two important responsibilities. The first responsibility is that it audits the employers by evaluating whether or not the employer fulfills the promises stated in the labor contract. Secondly, where the union is assigned the role of monitoring the work performance of employees and disseminating wages, the labor union officials serve as the employee monitors. These two functions of the union all tend to boost the overall efficiency of the company and ensure that the employees give their best to the work. It comes as no surprise that unions now play vital roles in helping companies achieve resounding success in the highly globalized and competitive markets. Top managements of most organizations turn to labor unions to aid them in achieving competitive advantage in the highly competitive market. Unions wield such power because they have the propensity to source for high-quality workers and also provide the necessary monitoring to ensure the desired goal (Pencavel).
Conclusion
Evidently, labor unions play key roles in ensuring efficiency and improved productivity in workplaces. This may not be well apparent in high conflict work environments. However, studies show that unionized workplaces are usually more productive than nonunionized ones. Trade unions maintain a balance of power between the workers and the management. By maintaining a balance of power, they ensure that both the workers and the management obtain mutual benefits. They may monitor workers' performances to ensure efficiency.
The misconception portrayed by many authors and economists that trade unions are biased towards employees has been extensively examined, and it is shown that in well-unionized environments, trade unions seek the mutual benefits of the both parties. Since power usually tilts towards the employers, trade unions come to the aid of the workforces to offer freedom of association, right to strike and collective bargaining. The purpose of all these is simply to adjust the imbalance in such a way as to ensure that power is balanced. No organization thrives in a conflict environment and obviously, trade unions come handy in helping create peace by playing the role of a middleman between the management and the workers.
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