Collective Bargaining in the Public and Private Sectors

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Introduction

Over the years, collective bargaining has helped employees achieve better working conditions and favorable pay in the workplace. In most cases, the workers use representatives to engage the employer in negotiations. The aim is to make sure that their needs are addressed (Budd, 2010). Trade unions represent workers in collective bargaining. The organizations exist in both the private and public sectors. However, there are differences between the two sectors as far as collective bargaining is concerned.

In this paper, the author will provide a comparative analysis of collective bargaining in the private and public sectors. To this end, the bargaining power of stakeholders across the divide will be compared. Finally, the economic weapons used by employers and employees in the two sectors will be analyzed.

Collective Bargaining in the Public and Private Sector: Differential Analysis

The two sides share some similarities concerning collective bargaining. However, there are also differences between them. To start with, the incentives behind negotiations in the private sector and government are different. A case in point is a union representing workers in a company owned by private investors. Such negotiations may lead to high wages for the employees. The increase in salaries would lead to a rise in the prices of products sold by the company (Elvander, 2002). The reason behind this is that the owners of the business would pass the cost of labor to the consumers. Here, the economic disadvantage of collective bargaining in the private sector is made apparent. An increase in prices may prompt customers to shift to other cheaper products. As such, in private-sector bargaining, the choice and welfare of consumers are given priority. Given the competitive nature of the modern market, the demands made by the labor force during negotiations must be reasonable. In the public sector, competition is relatively low. For example, when the demands for high wages are presented, the public entity may not necessarily suffer economically (Schnabel, Zagelmeyer & Kohaut, 2006). The money used to fund the operations of such a firm comes from the taxes paid by members of the public. For this reason, bargaining in the public sector may be unrestrained.

Consumers in the private sector can opt to use their money on alternative products. The case is different in the public sector. The taxpayer funding the operations of the government has no choice but to pay the taxes due (Kleiner, 2001). Consequently, unions in the public sector encounter few challenges when presenting their demands. The bargaining power of the management in government entities is reduced.

Collective bargaining in the public sector involves negotiations with the government (Kleiner, 2001). For this reason, it is possible to find advocates acting on behalf of the two sides. It is one of the reasons why the process of bargaining in public entities becomes long and tedious. The management must comply with government regulations when tackling the demands of the unions. In the private sector, the process does not take long. The management has the last word and does not necessarily have to answer to higher powers. Unions in the private sector are also more organized than those in representing workers in the public domain. Consequently, they may be able to procure the services of a full-time professional negotiator (Schnabel et al., 2006).

The Role of Bargaining Power in Securing a Favorable Contract Settlement

As already indicated, there are differences in the bargaining powers of stakeholders in the public and private sectors. The parties have varying levels of influence over each other. Their power is an important determinant of the outcomes of engagements (Budd & Na, 2000). Generally, bargaining power in the public sector is higher compared to that in the private sector. Unions representing civil servants employees have more influence because the government is their major source of funds. As an entity, the government does not have much to lose. All it needs to do to meet the demands of the employees is increase taxes. As such, the unions find it easier to exert pressure on the government to agree to their demands (Klasa, Maxwell & Ortiz-Molina, 2009). What this means is that managers in the public sector have less bargaining power compared to their counterparts in private entities. Even though private unions may be able to employ such professionals as lawyers to represent them, their bargaining power is still relatively low. Some of their demands may be turned down if they negatively affect the profitability of the firm. In the private sector, the management has more bargaining powers than the unions.

Strategies Used by the Management and Labor Unions to Increase their Bargaining Powers

The basic weapons used by the management in public and private sectors to enhance their bargaining powers include allowances and benefits of their workers. The two strategies give the employer room to maneuver when negotiating with the employees (Kleiner, 2001). The common weapons used by the unions to increase their influence include go-slows and strikes (Elvander, 2002). The threat to derail the operations of the firm forces the management to meet the demands of the workers.

References

Budd, J. (2010). Labor relations: Striking a balance. New York: McGraw-Hill Irwin.

Budd, J., & Na, I. (2000). The union membership wage premium for employees covered by collective bargaining agreements. Journal of Labor Economics, 18(4), 783-807.

Elvander, N. (2002). The new Swedish regime for collective bargaining and conflict resolution: A comparative perspective. European Journal of Industrial Relations, 8(2), 197-216.

Klasa, S., Maxwell, W., & Ortiz-Molina, H. (2009). The strategic use of corporate cash holdings in collective bargaining with labor unions. Journal of Financial Economics, 92(3), 421-442.

Kleiner, M. (2001). Intensity of management resistance: Understanding the decline of unionization in the private sector. Journal of Labor Research, 22(3), 519-540.

Schnabel, C., Zagelmeyer, S., & Kohaut, S. (2006). Collective bargaining structure and its determinants: An empirical analysis with British and German establishment data. European Journal of Industrial Relations, 12(2), 165-188.

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Collective Bargaining in the Public and Private Sectors

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