Category: Collective Bargaining

Management and unions play a great role in todays society because they provide their members with an opportunity to improve their lives. Basically, the task of management in this framework is to meet those purposes and objectives that were previously set. It deals with the representatives of the general public directly because the focus hiring and firing processes are in focus. In addition to that, it deals with the review of employee performance, scheduling, promotions, and issue resolution. As a result, workers become more efficient, and their working environment is positive and safe. Management concentrates on employees who are gathered in unions, and this connection links them. It defines and directs the way a company and its personnel work for them to reach mutual objectives and accomplish all tasks. Thus, it also ensures that workers operate effectively and efficiently.

As a result, it is critical for management to maintain constant improvements so that companies can overcome those barriers that prevent them from streamlined development. Focusing on organizational operations, management can define a companys main issues and offer solutions. Unions, in their turn, ensure that employees are not negatively affected by such activities. They protect peoples rights, assist them in the case of violations, control the organizational environment, provide benefits, and take part in conflict resolutions (Bakke, 2010). Previously unions helped to deal with the racism and sexism that were commonly observed in the workplace, which appealed to society. But today these issues are not that critical already, and people start noticing that unions do not trigger significant changes anymore. They can prevent a strike and can also lead to the bureaucratization of work and corruption.

With the help of their unions, employees can negotiate with employers. In this way, they maintain the process of collective bargaining. In its framework, they can identify employment terms, such as wages, health insurance, and pensions. Employees gather and define their priorities for bargaining collectively. This type of interaction between management and unions is rather frequent, and it allows to ensure the advantageousness of the contract. The history of unions affects current negotiations greatly. For example, a voting procedure for the certification of a bargaining agent was established in 1935, and in three years child labor was banned and minimum wage defined. Even though some elements altered with the course of time, unions protect the workers on the basis of the major labor legislation of the 20th century even now (Labor unions and collective bargaining, n.d.). Five years ago, unions had to deal with the fiscal crisis and the Republican attacks. In addition to that, they are focused on the promotion of female workers for them to obtain more white-collar and leading positions.

Today, the private sector becomes less active in the framework of the union membership; still, it contains a great part of it. The negotiation process that involves a public sector union would likely differ from the private one because their priorities tend to differ even though the main purpose of the union remains the same. The representatives of the private industry focus on bargaining power. They emphasize that employers and employees are uneven and try to achieve compensation and split up profits. Public-sector unions, in their turn, would not focus on this difference. Tending to generalize, they would not try to divide mutual profits equally but would try to benefit more, negotiating against those who pay taxes and obtains advantage from governmental expenditures (Public and private unions, 2011).

I believe that this exercise improved my understanding of the collective bargaining process greatly. I received an opportunity to get to know more information about its history, which gave me a chance to realize what actually was done due to the collective bargaining during the last decades and how it affected current labor relations. What is more, I explored this process from the perspective of public and private industries, which also turned out to be rather beneficial because I received a chance to use my critical-thinking skills. In addition to that, I realized that management and unions represent different parties (organizations and their employees) but have similar objectives that are beneficial for the personnel. It can be even claimed that in some cases unions help management to work with employees, which turned out to be rather unexpected to me. I concluded that mediation and arbitration are rather useful in the framework of dispute resolution. Objectiveness and an opportunity to explore the issue deeply not affected by personal emotions preferences ensure the possibility for both company and its personnel to benefit.

A collective bargaining agreement is a contract that points out employment conditions. It is established between two parties: management that represents a particular company and union that represents its personnel. This document is legally enforceable during a specified period of time. A collective bargaining agreement is extremely important because it consists of information that is critical for every employee. It reveals information about wages, schedules, working environment, vacations, etc. In addition to that, it discusses the way dispute resolution will be maintained during the time this contract is enforced. The agreement should include as many details as possible because in this way companies and workers will have fewer chances to abuse their authority. Thus, both an organization and its employees will be able to resort to the collective bargaining agreement and prove that their point of view is the one to be taken for granted.

The collective bargaining process requires efficient utilization of organizational leadership competencies for a successful negotiation. In this framework, communication provides an opportunity to influence stakeholders and appeal to them. Problem-solving ensures successful resolution of discussed issues and grievance settlement, which is likely to lead to the improvement of the relationship between management and employees. Decent teamwork is critical for collective bargaining because it provides the representatives of the unity with a chance to define their priorities so that everyone remains satisfied and mutual goals can be considered.

Analytical skills ensure that a range of complex issues is decently articulated so that the opposite party clearly understands what is required and why. It allows us to make well-considered decisions and to break arguments that support the claim. Legal and ethical practices are rather advantageous because they ensure understanding and effective utilization in the practice of professional standards and consideration of managements and employees interests. The strategic approach makes communication during this negotiation process strategic so that all its steps are identified beforehand, and the maximum impact can be achieved. It also allows us to avoid misunderstandings and confusion. Finally, research gives a chance to refer to authoritative information and ideas of other professionals to support the personal argument and make it sound stronger for stakeholders (Grant, 2011).

References

Grant, A. (2011). Developing a competency framework for labor relations professionals. Web.

Labor unions and collective bargaining. (n.d.). Web.

Public and private unions: Whats the difference exactly? (2011). Web.

Collective bargaining entails a series of negotiations between employers and the representatives of workers with the major aim of arriving at an agreement to regulate, improve, or enhance the conditions of working. In the current labor market, Marczely (2008) is of the view that trade unions are charged with the role of ensuring workers are not subjected to inhuman conditions that degrade them.

Through the process of collective bargaining, the writer notes that the two parties usually agree to set out a wage scale, working hours, the training needs, healthcare issues, overtime, conflict resolution, mechanisms, rights, freedoms, and safety of workers as they undertake their normal duties in their respective stations.

The authors views are valid and credible in the sense that he captures the most important aspect of trade unions since they are expected to engage in talks with a single employer or group of employers representing various businesses. He further observes that the countrys laws usually determine the terms and conditions of negotiating, but the aim is always to reach at a consensus in order to prevent conflicts, as they have the potential of bringing down the performance of the organization.

In this regard, his ideas are reliable because the negotiated agreement serves as the labor contract between the employees and business owners. In many countries, workers in various sectors, including both public and private sectors, are supposed to present their grievances through the trade unions.

The United States is one of the countries that witnessed a complex collective bargaining process. Some analysts are of the view that the country has the best trade unions with the capacity to fight for the rights of workers appropriately. The paper looks at the developments of collective bargaining in the country with the aim of drawing a conclusion on whether the process has been successful.

In their view, Haber, Malin-Adams, and Khamalah (2008) observe that employees of any country are allowed to present their issues through unions. Again, they analyze the idea suggesting that the US constitution allows members of any trade union to force their employers to provide for them what they want. They trace the activities of unions to the National Labor Relations Act (1935), which talk about the relationship between the employed and the employers.

They further note that the bill was introduced specifically to address the issues of employees in the private sector who were often oppressed. In the 1935 law, the researchers note that the employer was prohibited from spying on the worker, discriminating them based on gender, race, and age, harassing them, and firing workers without giving sufficient reason and following the due process.

At the time, employers were concerned with the rate at which trade unions were being formed in the country forcing some to develop strategies to counter the trend. The ideas of the scholars are reliable because organizations formed trade unions that served their interests, something that the 1935 law attempted to address.

Unfortunately, the article tends to suggest that the law protected the employer as well because it was against antitrust in the sense that members would not fix high wages and salaries for their services. Again, they observed that it was illegal to force an individual to belong to a trade union or hire them based on the opinion on labor organizations.

Klein (2014) noted that workers were empowered further in the subsequent years because voting was made free and fair particularly to reflect the national presidential and local elections. In his analysis workers were influenced to vote for particular members, especially those believed to represent the interests of employers. The owners of the means of production understood that trade unions existed to empower and enlighten workers on wages, conditions of work, and benefits.

Electing radical leaders to high offices was considered disastrous since organizations would not have the power to determine salaries, which would have an effect on the profitability and financial performance of organizations. On the side of employers, the author noted that it was determined that the senior management was supposed to negotiate with workers representatives on behalf of stakeholders.

The ideas of the scholar present accurately the demands of workers at the time, as he noted that the main issues that affected workers were setting up of commensurate wages, establishing the required work hours, calculation of benefits, the conditions of employment, and the issue of inappropriate firing.

He also captured an important aspect on the development of collective bargaining claiming that individual negotiations have never been allowed since the organizational management is likely to cajole a single worker to accept a faulty decision, something that validates his study. The process of designing a contract between workers unions and managements of various companies is bureaucratic since a team sits down with the management before approving the new contract.

Each worker has the chance to participate in the process by voting to the already formulated policy. Once the policy or contract is approved through a simple majority vote, it is expected to serve its purpose for a specified period upon which reforms are undertaken to ensure it meets the current needs of both parties.

Memoli and Semuels (2011) conducted a study concluding that, in at least twenty-eight states in the country, each employee is expected to contribute towards the trade union account since it facilitates of the effecting handling of issues. The researchers note that, even though no specified amount is set, many states suggest one or two percent of the salary. The expenditure of union dues has been a cause of disagreement in the country prompting the Supreme Court intervention.

In Ohio for instance, the scholars note that the judges ruled that the workers unions do not have the authority to utilize an individuals dues without consent because leaders tend to misuse resources in facilitating political debates that do not bring benefits to workers. Before industrial revolution, the issue of collective bargaining was never coordinated since workers in each organization had to fight their way.

However, the enhancement of the industrial sector was a blessing to the trade unionists since it facilitated the formation of various labor organizations throughout the country. In the late 19^th century, Kiely (2007) observed that the American Federation of Labor was created, which improved the bargaining power of many employees in the country.

In 1926, the scholar clarified that employees in the railway industry participated in the formulation of the Railway Labor Act forcing each employee to channel his or her grievances through the trade union, which was a turning point in the activities of workers aimed at improving their welfare. The court reaffirmed in 1931 that its previous decision prohibiting employers from interfering with the process of electing union officials, as this had a direct impact on the employees bargaining power.

In 1962, the administration in the US bowed down to pressure when the president, F. Kennedy, issued a directive order permitting workers in the civil service to form unions that would play a role as far as bargaining collectively was concerned.

References

Haber, L., Malin-Adams, N., & Khamalah, J. (2008). Labor negotiations, misconceptions, and repeated prisoners dilemma: a simulation. Journal of Collective Bargaining, 2(1), 329-341. doi: 10.2190/CN.32.4.f.

Kiely, T. C. (2007). Collective bargaining. Auckland, N.Z: CCH New Zealand.

Klein, G. (2014). College football players have right to form a union, NLRB rule. Los Angeles Times, p. 6.

Marczely, B. (2008). The contractual Diminishing of FMLA employee Rights. Journal of Collective Bargaining, 32(4), 279-286. doi: 10.2190/CN.32.4.b.

Memoli, M. A., & Semuels, A. (2011). Ohio votes to overturn new collective bargaining law. Los Angeles Times, p. 18.

Collective bargaining makes it possible for employees to negotiate with their employers on issues related to working conditions. Namit & Larry (1987) explains that among others, wage scale, pension, working hours, overtime, safety and health, are set through collective bargaining agreements.

In the United States, the state of Wisconsin was one of the first to introduce collective bargaining rights to its majority public workers. However, the introduction of the Budget Repair Bill (on February 11, 2011) proposed taking away these collective bargaining rights of public-sector unions. The Budget Repair Bill was introduced by newly elected Governor Walker to close a perennial budget deficit. Earlier, the deficit had been filled three times by former governor Jim Doyle (2003-2010) by taking $1.257 billion from transportation fund. Walkers bill was passed by the Wisconsin Assembly, On March 10, 2011, with a vote margin of 53-42.

According to the bill, state employees are required to pay more toward their pension in an attempt to help the state raise up to $ 180 million a year in order to close the states $137 million budget gap. Thus, the budget repair bill makes it almost impossible for public sector unions to bargain collectively for its members over pension, wage scale and healthcare. The bill also limits public employees pay rise in response to corresponding rise in rate of inflation, arguing that such cuts are necessary to prevent massive job losses.

According to the 1996 pension plan collective bargaining agreement, the districts paid for employees a total of 13% to the pension scheme. But the recent legislation presented by Walker requires employers to contribute 6.8%, with another 6.2% contribution coming from the employee. Another provision in this bill to reduce the capacity of the legislative oversight of the state Medicaid program was also strongly opposed by the workers union.

Since the bill became effective as law on June, 29, 20011, the State has recorded positive change. In Kaukauna, for example, school officials project that at end of the financial year they will make a surplus of $1.5 million, up from a $0.4 million deficit. However, the policy has also recorded setbacks. For example, the Wisconsin Education Association Council (WEAC) announced a 40% workforce layoff as a result of loss of revenue.

Wisconsins collective bargaining issue generated a heated debate with some organizations supporting Walkers legislation and others condemning it. Public and private unions joined hands in solidarity to oppose the Governors measures. These included the largest police union whose members are not affected by this legislation. Democratic state senators made all attempts to thwart the passing of the legislation by mobilizing demonstrators during the protests but failed to stop its passage.

On the other hand, organizations (mainly the Tea Party) supporting walkers legislation were led by a conservative activist group called American Majority. The activist group has very strong ties to the conservative Republicans and is thought to be financed by the Koch business tycoon brothers. Conservative media baron Andrew Breitbart was also among those who led the counter-protest.

Davey & Steven (2011) shows that long after the passage of the bill in March 2011, several issues still remain unresolved and major points are still being negotiated. A lawsuit filed by Dane County Executive challenges the constitutionality of the budget repair bill, stating that the bill still contains fiscal provisions. This means that it requires a quorum for it to be regarded as law. A number of lawsuits have also been filed by individuals and workers unions alleging that the bill is not legally enforceable as it contains unlawful budget provisions. These are some of the points being negotiated and which are yet to be determined.

References

Davey, M., & Steven, G.,(2011). Wisconsin May Take an Ax to State Workers Benefits and Their Unions. The New York Times,10 (8), 22.

Namit, C., & Larry, S., (1987). Prescription for Labor Pains: Combine Bargaining with Problem Solving. The American School Board Journal,74 (24), 102.

Types of Bargaining Strategies

Bargaining strategies are needed to resolve a financial or proprietary conflict and establish communication and negotiation to resolve a problem. In the case of collective bargaining, there are two main strategic approaches, distributive and integrative. Among the factors to consider when choosing a strategy are information, timing, and power. Distributive bargaining implies that each of the opponents seeks to get the largest possible share of the resources being discussed. This type of bargaining means that it involves limited and fixed resources. Traditionally, in the case of such a bargain, one party receives the full amount, and the other receives nothing, which is why such a bargain is also called zero-sum (Carrell & Heavrin, 2013). Often distributive bargaining is used in the purchase of such important goods as real estate or vehicles, when the high price, which is the main factor, is in the discussion.

With this type of bargaining, the previous or future relations of the adversaries turn out to be unimportant. However, it should be borne in mind that despite this anonymity of relations, in collective bargaining there may be cases of attempts to equalize the scores by asking for unrealistic demands next time. Integrative bargaining includes collaboration between the parties, the search for joint solutions on certain issues. Thus, new sources of value are born.

Tactics and Issues

Acceptable tactics include collecting information about the opponent, data on his contacts and associates. Manipulation of the stated requirements is also considered a suitable tactic. It makes sense to make an unrealistically high initial request, but not to communicate a lower threshold of consent when bidding. A pronounced lack of haste is also a useful psychological tactic. One should not make false promises or distort facts, try to blackmail or threaten an opponent, or collect confidential information about an opponent. One of the main problems in bidding is the prohibition of workers to negotiate in most US states. Despite the growth of the public sector of bargaining statistically, in many states this type of bargaining is eliminated with zeal. Bargaining can be capable of pitting two labor unions against each other, which is all the more exacerbated when the number of jobs is limited.

Trends in Bargaining

In modern realities, there is a whole trend of devolving bargaining at the level of an entire enterprise. While earlier the employer negotiated with individual workers, at the moment there is a bargaining with the whole group. The reason for this trend is the inability to meet the needs of individual companies and the inability to accommodate the employer. Such a trend is able to save time and finances for the management group, and also makes it possible to adapt to changing market conditions. The US private sector, for the most part, tends to trade exclusively at the level of the place of work. An attention-grabbing trend is also sectoral bargaining, which is considered the modern standard of doing business (Cohen, 2022). With sectoral bargaining, the likelihood of the worker being included in a labor union and active self-organization is much higher (Opute & Mahmoud, 2022). Among the new processes included in this type of bargaining is sectoral dialogue, the search for a collective agreement. Sector bargaining is looking for a solution that would satisfy every worker in a single sector of the economy. This trend is in sharp contrast to the entrepreneurial bargaining, in which agreements cover entire enterprises and the role of the boss is decisive.

References

Carrell, M. R., & Heavrin, C. (2013). Labor relations and collective bargaining. Pearson.

Cohen, L. (2022). U.S. Bargaining and organizing rights trail every other democracy. New Labor Forum, 31(1), 8-10. Web.

Opute, J. E., & Mahmoud, A. B. (2022). What sort of collective bargaining is emerging in Nigeria? Personnel Review. Web.

This is issued by the government through the board of labour relations in that the union has the capacity to operate as a bargaining authority for all workers. This is because it has the mandate from the majority. The process of Union сertification has different unified stages that drive it and below are well detailed procedures to be followed during the process of Union certification:

• Cards of membership. The first requirement for any Union is the membership card which shows that a certain employee is a signed fully fledged Union member. Any card of membership is dated and signed by the owner and stipulates that the worker’s should be represented by the Union. The Union keeps all the cards of workers in a suggested bargaining unit together with the Union application to the agency (Visser, 2011).
• Application for certification. With the membership cards, the application must be filed by to the agency clearly stating the data which includes the overview of the suggested bargaining Unit (Visser, 2011). The number of workers that are believed to be recruited in that Unit and together with the details which shows the mechanism of conducting a secret ballot voting process of all workers.
• Secret ballot voting. The board analyses the application if it will be successful and whether the Unit suggested by the Union will be valid for collective bargain. This should also be embarked by 40% of the workers in the Unit. If all pre requisites are met, the board will issue the mandate for the vote of all workers on the fifth day following the date of application.
• Failure or success. The results from the voting process are gathered. E.g. if the Unit is comprises of 200 workers but on 20 turn up to cast their votes, if 12 or more of those workers vote in favour of the Union, then the Union will be authorised to represent all 200 workers. As the majority cast towards the Unit, then the application will proceed.
• Employers and Union collective bargain. If the Union is authorised to show up on behalf of its members, there is full mandate to negotiate in a good way. This gathers all employees’ issues during work. E.g. salaries, wages, working hours, health issues, benefits etc.

The bargaining process might take a long time lag as long as the employer bargains in a positive way, there are no attachments to agree any contract. Several sectors employees contain a different legal rights to bring a Union to represent them in the process of negotiation with their employer. The agency prohibits certain characters from the employer in order to ensure that there is a good climate for all employees to choose if to unionise or not. Specifically, employers should not look forward to compel a worker from becoming a member of the union by any way of the means below:

1. Intimidation. This is an act where employers try frighten employees in order to persuade them support the union.
2. Threatening. Employers always do acts that force employees to accept the process of unionisation.
3. Dismissal. Employers can promise to chase or end the contractor with the employees. This may force the worker to support the process of unionisation.
4. Salary or wage increment. This acts as a motivation to workers in a way that they support the union.
5. Setting of unwanted conditions of unemployment. There should not be any kind of engagement to eliminate joining are leaving from being a member of the Union. The board will intervene whether the employer has put pressure on employees.

Like other employers, unions are also prohibited from committing unlawful labour practice. E.g. unions have no mandate to organise employees at their work places without employers will. Though, it does not imply that workers are protected from talking about the advantages of unionisation. During the process of unionisation, there are restrictions that apply to the union during the certification:

• Violating employees in their dairy working conditions from their rights in order to support the unionisation e.g. threatening workers or chase them because of failure to support the union. Restraining an employer in their favour of bargaining representatives in a way of meeting leaders only on behalf of employers.
• Persuading employers to under look an employee for encouraging membership e.g. telling employers to penalise workers who are not part in the process of unionisation.
• Denying to involve in a good way during collective bargaining e.g. refusing to turn up for bargaining consensus with employers.
• Strike practices during collective bargaining.
• Involving employers to pay for un done work.
• For the union that is not authorised to represent a set of workers, in an act to recognise them in order to support the union.
• Frequently, groups of workers come together as a bond to address and negotiate common needs with employers.

In the process of unionisation, employees can be more inefficient in the process of negotiations than individuals. Collective bargaining is the process where by all employees negotiate with employers on the terms and conditions of employment. This entitles the process through which its done and its done as follows:

1. Preparation. At the starting point, all representatives of each party prepares the talks to happen during the meeting. Every member is mandated to be well versed with points to be discussed during the meeting and should bear information of the workers’ laws. The board should be well organised with the change proposals required for terms and conditions of employment bearing that qualitative information to support its stand. The union must collect valid information regarding the financial status of the business alongside with its potential to pay and prepare a full report on issues and needs of employees.
2. Discuss. All parties come up with rules that will govern the negotiations and the negotiator is from the board who is mandated to chair the discussion. On the other hand, the issues could pension, health insurance etc. other administrative issues include; changes in technology, job safety and working conditions.
3. Propose. At the point, the lead negotiator starts the conversation with a beginning statement and thereafter all parties stipulate their needs (Doellgast., Nohara., and chobanian, 2009). This activity can be referred to as brainstorming. This is where every party lays down its ideas which leads to arguments.
4. Bargain. The negotiation starts on this stage, whereby every party tries to overtake each other. The process can last for days until the final contract is reached. Sometimes, parties draw a solution but the third party comes in to settle the disputes.
5. Settlement. This is the last stage of collective bargain process, where all parties come in agreement of the solution to all problems discussed about. The agreement is made between the employer and the employee which must be signed by both parties in order to show the will of acceptance (Doellgast, 2012).

In order to get problems solved, the board must follow the above discusses steps in order to empower workers with equal rights to bring out their minds.

Reference

1. Visser, j. (2011), ‘ICTWSS: Database on institutional characteristics of trade unions, wage
2. Setting, state intervention and social pacts.
3. Doellgast, v. (2012), Disintegrating Democracy at Work. Labor Unions and the Future of Good Jobs in the Service Economy, Ithaca, NY: ILR Press.
4. Doellgast, v., h. Nohara., and tchobanian, r. (2009), ‘Institutional change and the restructuring of service work in the French and German telecommunication industry’, European Journal.

The Supreme Court of India defined Collective Bargaining as “the technique by which dispute as to conditions of employment is resolved amicably by agreement rather than coercion” [1]. The process of collective bargaining involves discussion and negotiations between workers and employer regarding the terms of employment and working conditions. The trade union is generally used to represent the workers to express their grievances regarding conditions and wages before the employer and management. It is considered to be an unfair labor practice as per the Industrial Disputes Act, 1947 (IDA) if the employer refuses to bargain with the trade union. It is an effective system as it helps employers to resolve the issues of the workers because it mostly results in undertaking actions [2]. However, the legal procedure is complicated in India for pursuing collective bargaining.

Stages of Collective Bargaining in India

Charter of Demands

The Charter of Demands essentially means the document that mentions the requirement of the workers in the industries regarding the issues relating to wages, bonuses, allowances, working hours, benefits, holidays etc. Generally the union notifies the call for the collective bargaining. After this the ‘Charter of Demands’ is drafted after discussion and consultation with the union leader.

Negotiation

Negotiation begins after the submission of Charter of Demands by representative of trade union. Before negotiating, preparation is done both by employer and unions by collection of data, policy formulations and strategies for negotiation. This process takes much longer time when multiple unions are involved. For example, it may take months or even years for public sector.

Collective Bargaining Agreements

After the negotiations are over, both the employer and the union representative will have to enter the agreement.

Strikes

If both parties fail to reach a collective agreement then the union may go for strike. But proper notice has to be given prior to the strike to allow the employer to make decisions and it is called ‘cooling period’.

Conciliation

A conciliation proceedings will begin after receiving strike notice from the union. Based on this Board of Conciliation will be appointed with equal numbers of both parties. No strike can be conducted during the conciliation proceedings.

Compulsory Arbitration or Adjudication

When conciliation fails parties can go for voluntary or compulsory arbitration. Arbitrator makes recommendations to parties without their consent and both parties must accept to the conditions set by the arbitrator.

Collective Bargaining Agreements in India

1. Bipartite or voluntary agreements. It is drawn up in voluntary negotiations between employer and the trade union. It is generally easy for implementation because both parties accepted it voluntarily.
2. Settlement. It is tripartite in nature because it also involves conciliation officer. They generally arises for specific disputes, which is referred to the officer for reconciliation.
3. Consent awards. When an agreement is reached while the dispute is pending before a compulsory adjudicatory authority and incorporated into the authority’s award it is called as consent awards. Even though the agreement is reached voluntarily it becomes part of binding award pronounced by the authority constituted for the purpose.

Contents of Collective Bargaining Agreements

After the agreement is reached a memorandum of settlements is drafted which enumerate the various clauses that tells the relationship between trade union and employer. Typical clauses in the memorandum of settlements are as follows:

• The duration of the memorandum of settlement that has been agreed by the parties.
• The terms regarding settlement with respect to wages and other payment related activities has to be mentioned. Also arrears with respect to work hours, concession has to be included.
• In case of strikes and lockouts of trade union, the conditions for the same has to be mentioned.
• The obligation raised by the trade union.
• The obligations of the employer regarding the terms.
• The penalties regarding the breach of agreements of employer and trade union.
• The dispute resolution method has to be mentioned the clauses.

Levels of Collective Bargaining in India

National Level Industrial Bargaining

This is centralized bargaining unit. Common in core industries such as banks, coal, steel, ports and docks and oil where central government employments are dominant.

Industrial Cum Regional Bargaining

Generally takes place in tripartite form. Common in industries where the private sector dominates such as cotton, jute, textiles, engineering, tea plantation, portsiiand docks.

Enterprise or Plant Level Bargaining

It takes place within the particular industry where problem arises. Bargaining takes place between one or more unions with the employer of management. Takes place only in private industries.

Unit level Bargaining

This is decentralized bargaining system. Generally takes place in MNC’s belonging to IT industry and bargaining generally takes place at individual level.

The Council of Europe is not an institution of the European Union. It was founded in 1949 and one of its main goals is to protect human rights and work towards the standardization of legal and social protection in all its 46 member states. In 1965 the ‘European Social Charter’ entered into force. Article 4 paragraph 1 speaks on the “right to fair compensation’ and urges the signatory states: ‘Recognize workers’ right to compensation which will enable them and their families to enjoy a decent standard of living”. “The Council of Europe can examine the remuneration systems of the member states and assess whether they provide fair remuneration for their work based on their dignity”. For example, the Council of Europe concluded that in 2002 the national minimum wage in the UK (based on the rate in force in 2000) was too low to comply with Article 4. It also stated that it could not properly assess the situation in UK Britain because it failed to provide data on the net minimum wage of a non-family worker.

But the UK is not alone in this. In a recent summary of decisions taken under paragraph 1 of Article 4, the European Committee of the Council of Europe on Social Rights also concluded that Austria, Greece, the Netherlands, Slovakia and Spain did not comply with the Wages Directive. However, he refrained from reaching a conclusion on the situation in Denmark, Germany, Iceland and Norway pending further information.

If a country is unable to comply with the Social Charter, it should submit a timetable and publish a process showing how and when it can comply with the requirements of the Charter. The European Committee gives several some many warnings, recommendations and additional recommendations to ensure that this country acts by following per under the ‘Social Charter’.

Surprisingly, such regular assessments of the state of respect for social rights throughout Europe remain so restrained. Their reports cite cases of non-compliance with Article 4, paragraph 1, and also contain information on non-compliance by many countries with other provisions of the Social Charter, but it is doubtful that many trade unions across Europe are aware of this. The situation is similar with the issue of a ‘decent wage threshold’: it is clear that the discussion of this ‘threshold’ and the decision to change it are considered to be very much internal issues of the Council of Europe Committee on Social Rights and does not spread wider. Collective bargaining in solidarity. The main purpose of collective bargaining is to protect workers’ wages from inflation and to provide them with at least some of the benefits of any productivity gains. This is the basis of the guidelines adopted by the ETUC and several European trade union federations to coordinate the collective agreement. At the same time, attention is focused on increasing average national productivity, rather than on changes in labour productivity in specific sectors of the economy. The rationale for this is that low productivity industries must keep pace with high productivity industries.

This is a particularly important issue for the public service sector, where even achieving a widely accepted measure of productivity growth is a challenge. It is in this sector that several some many very important professions are employed, such as social services, which, however, is considered low productivity if the standard for measuring tools applied to them.

Solidary collective bargaining has come under pressure in recent years as governments and employers seek more localized elements of collective bargaining in centralized national and industry negotiations. In public services, deregulation and privatization have also contributed to the continuation of this trend of less wage bargaining at the local level, or of undermining collective bargaining, as well as of workers hired by outsourcing companies themselves being hired by organizations to apply collective agreements with even worse wages and working conditions, or avoid any collective agreements at all.

In general, since the 1970s, the long-term trend has been to reduce the share of wages in national income, as wage in many European countries lags behind productivity growth (Thorsten Schulten, 2002).

This, in turn, has an impact on the economy as a whole and, in particular, has become a hotly debated topic in Germany.

The Trade Union, backed by researchers in Germany, France and Switzerland, has highlighted the economic role of wages in its ‘Theses on European Minimum Wage Policy’. They note that businesses increasingly view pay simply as “a factor in production costs and a variable in the international competition for company locations”. Thus: “the economic function of workers’ wages is pushed into the background as a significant component of national economic demand, without which a prosperous economy is impossible”. There is also the issue of getting a ‘decent income’ and the fact that workers are not a commodity, and that their income should not simply be left at the mercy of the market. The neoliberal argument is for markets to work, through the logic of a German website created to encourage people to apply for jobs by terminating other employees.

Even in some public service sectors, employers acknowledge that wage-setting cannot simply be left to the market. A study by the Bilateral Commission on Local Government Salaries (October 2003) on the state of wages in municipalities in the UK states: “Comparison of markets and their assessment it must be done scrupulously. The fact that it is possible to hire workers at a lower rate than what is offered is not a necessary indication that the proposed rates are too high”.

The International Labor Organization (ILO) points out why employers can support the minimum wage check as “to increase productivity by motivating workers’ and as a factor in ‘Reducing labour change’, which can be very costly for firms”.

Average hourly wages in 2017: 1) in EU countries – 26.76 euros per hour; 2) in the euro area countries – 30.33 euros per hour. Thus, the average salary in the countries of the European Monetary Union is higher than the EU average. According to the statistical agency Eurostat, in the first quarter of 2020, the largest increase in average wages was recorded in Romania (13%), Latvia (11%) and Hungary (10%). They are followed by the Czech Republic and Lithuania with a growth of 9% and Slovakia with a growth of 8.5%. For the first quarter of 2020, wage growth in the euro area countries was 2%, and in the EU countries (EU-28) – 2.7%.

To find out if the Council of Europe wage levels is adequate in a given country, its European Committee of Social Rights (SEBS) has proposed that 68% of gross average earnings be considered the norm. This was reminiscent of the definitions used by the OECD, namely two-thirds of the average earnings of full-time workers. The Council of Europe definition has gained some acceptance and has certainly become a key target for low-wage activists in the UK. However, according to the Council of Europe, it was never just a matter of assessing, for example, whether the national minimum wage was above or above this threshold. The Council of Europe Committee on Social Rights (ECSC) has said it wants to take other factors into accounts, such as taxes and social benefits. This proved to be an impossible task and the ECSC announced that it was unable to determine whether or not governments were providing sufficient revenue.

This committee then prepared another benchmark – 60% of net average earnings. The decision to make this change was attacked in the UK by low-wage activists. Carol Murray of the Scottish Low Wage Group said: “This group believes that such a redefinition not only hides the overall effectiveness of a decent wage threshold as a means by which poorer European citizens can hold their governments accountable for their policies but also bury the usefulness of the definition as a tool for analysis of unnecessary complexities that can only be revealed by statisticians in the service of the Member States” (Radical Statistics, No.85, 2004).

Thus, a key feature of any set goal should be its comprehensibility and ease of assessment when checking the salary level. This is especially important if the aim is to set goals or objectives for collective bargaining, lobbying and campaigning across Europe. “This group believes that this change in definition does not only serve to hide the overall effectiveness of a decent wage threshold as a means of which poorer European citizens can hold their governments accountable for their policies but also buries the usefulness of the definition as a tool for analysis among unnecessary complexities that only statisticians in the service of Member States can hope to resolve” (Radical Statistics, No.85, 2004).

Introduction

In this assignment, I was asked to critically engage with the Labour Relations Act (LRA)[footnoteRef:1] provisions on Organisational Rights and Collective Bargaining. Having read the two cases that I was asked to analyze, it will be better for me to start with the first one then move to another. [1: Act 66, 1995 (“the Act”).]

I will give clarity about organizational rights and collective bargaining. Define the workplace and deal with different sections from the Labour Relations Act, (LRA)[footnoteRef:2] and the Constitution[footnoteRef:3] of the Republic of South Africa. [2: Act 66, 1995.] [3: Constitution 1996.]

The early twentieth-century patent the security of worker’s rights to form trade unions and engaged in collective bargaining were restricted to white employees. South Africa did not recognize or endorse freedom of association and collective bargaining. The democratic elections in 1994 surfaced the way to success, a task team was selected to restructure the labour legislation. After doing that, South Africa became a leader in applying international constitutional and labour standards[footnoteRef:4] cliffdekkerhofmeyr.com. [4: https:// www.cliffdekkerhofmeyr.com/en/news/publications/…]

The Labour Relations Act,[footnoteRef:5] was followed by the introduction of various Acts, Basic Conditions of Employment Act,[footnoteRef:6] 75 of 1997, Employment Equity Act,[footnoteRef:7] 55 of 1998 and Skills Development Act,[footnoteRef:8] 97 of 1998. [5: Act, 66 of 1995.] [6: Act, 75 of 1997.] [7: Act, 55 of 1998.] [8: Act, 97 of 1998.]

Organizational Rights

Organizational rights are the umbrella term for a number of rights deliberated to trade unions. A registered trade union who seeks organisational rights at the workplace needs to comply with section 21[footnoteRef:9] of the Labour Relations Act (LRA). [9: Act 66, 1995, Exercise of rights.]

Sec 21(1-10) state the following:

1. Any registered trade union may notify an employer in writing that it seeks to exercise one or more of the rights conferred by this Part in a workplace.
2. The notice referred to in subsection (1) must be accompanied by a certified copy of the trade unions certificate of registration and must specify-
   1. a) the workplace in respect of which the trade union seeks to exercise the rights;
   2. b) the representativeness of the trade union in that workplace, and the facts relied upon to demonstrate that it is a representative trade union; and
   3. c) the rights that the trade union seeks to exercise and the manner in which it seeks to exercise those rights.
3. Within 30 days of receiving the notice, the employer must meet the registered trade union and endeavour to conclude a collective agreement as to the manner in which the trade union will exercise the rights in respect of that workplace.
4. If a collective agreement is not concluded, either the registered trade union or the employer may refer the dispute in writing to the Commission.
5. The party who refers the dispute to the Commission must satisfy it that a copy of the referral has been served on the other party to the dispute.
6. The Commission must appoint a commissioner to attempt to resolve the dispute through conciliation.
7. If the dispute remains unresolved, either party to the dispute may request that the dispute be resolved through arbitration.
8. If the unresolved dispute is about whether or not the registered trade union is a representative trade union, the commissioner-
   1. a) must seek
      1. (i) minimizeise the proliferation of trade union representation in a single workplace and, where possible, to encourage a system of a representative trade union in a workplace; and
      2. (iminimizenimise the financial and administrative burden of requiring an employer to organizationaltional rights to more than one registered trade union;
   2. b) must consider-
      1. (i) the nature of the workplace;
      2. (ii) the nature of torganizational organizational rights that the registered trade union seeks to exercise;
      3. (iii) the nature of the sector in which the workplace is situated; and
      4. (iv) the organizational history at the workplace or any other workplace of the employer; and
   3. c) may withdraw any of the organizational rights conferred by this Part and which are exercised by any other registered trade union in respect of that workplace, if that other trade union has ceased to be a representative trade union.
9. In order to determine the membership or support of the registered trade union, the commissioner may-
   1. (a) make any necessary inquiries;
   2. (b) where appropriate, conduct a ballot of the relevant employees; and
   3. (c) take into account any other relevant information.
10. The employer must cooperate with the commissioner when the commissioner acts in terms of subsection (9), and must provide any information to the commissioner and facilities that are reasonably necessary for the purposes of that subsection.

Collective bargaining

Collective bargaining is at the centre of the labour relations system. It is an ongoing process of negotiations between representatives of workers and employers to establish the conditions of employment. Collective bargaining developed with the growth of trade unionism, especially from 1890.[footnoteRef:10] [10: https:/www.britannica.com.]

Sec 23 (5)[footnoteRef:11] of the Constitution states that Every trade union, employer’s organization and employer has the right to engage in collective bargaining. National legislation may be legislated to regulate collective bargaining. [11: Constitution, 1996.]

recognizes the right of trade unions to engage in voluntary collective bargaining. This system of voluntary collective bargaining is created via the instruments provided for in the LRA[footnoteRef:12] [12: Act, 66 of 1995, Mario Jacob’s notes Ph.D. Candidate Law Faculty and Sociology Department University of Cape Town.]

The issue(s) in dispute:

Case Abanqobi Workers Union obo Members/IR Voigts (Pty) Ltd[footnoteRef:13] (the applicant) claimed organisational rights from the respondent, which operated five farms in the KZN Midlands and performed contract work for various agricultural businesses. The union (AWU) recruited only the members working on the Mount Verde farm, but two of its members was transferred to other farms. [13: [2019] 9 BALR 942 (CCMA).]

The union (AWU) claimed that it was entitled to organizational rights in terms of the LRA,[footnoteRef:14]but the respondent was willing to grant only sec 13[footnoteRef:15] which deals with union subscriptions which the union (AWU) rejected. [14: Act, 66 of 1995.] [15: Act, 66 of the LRA.]

It is common cause that ratified conventions of the International Labour Organisation (ILO) are binding in South Africa. When interpreting both the Constitution[footnoteRef:16]of the Republic of South Africa, 1996 and the LRA[footnoteRef:17]… The two key conventions of relevance here, both of which have been ratified by South Africa, are the Convention on Freedom of Association and Protection of the Right to Organise 87 of 1948 and Collective Bargaining Convention 98 of 1949. [16: Constitution of the Republic of South Africa ,1996.] [17: Act, 66 of 1995.]

The union seeks sections 12[footnoteRef:18], 13, and 15 rights, because without having these rights it is difficult to recruit new members and to serve existing members. Sec 12 speaks about access to workplace, sec 13 speaks about the trade union subscriptions and sec 15 speaks about leave for trade union activities. In this case IR Voigts (the respondent) is willing to give the union sec 13 which speaks about deduction only meaning that the union will not have access to the workplace in order to recruit more members and their members will not be able to attend any union activities. [18: Act, 66 of 1995.]

The union must be sufficiently representative in order to access the minimum organisational rights in the LRA.[footnoteRef:19] These rights include trade union access to enter the workplace; hold meetings with employees outside their working hours… [19: Section 12 and 13 LRA. Sufficiently representative, generally is between 20 to 30 percent of the trade union membership at the workplace. ‘Mario Jacobs’ notes…]

In South African Industrial, Commercial and Allied Workers Union / Denny Mushrooms a Division of Libstar Operations (Pty) Ltd[footnoteRef:20] [20: [2018] 5 BLLR 543 (CCMA).]

The CCMA had to consider whether the South African Industrial Commercial and Allied Workers Union (SAICWU) should be granted organisational rights in terms of sec 12-15 of the LRA. The employer, Denny Mushrooms, refused to recognise SAICWU claiming that the union’s constitution does not include the agriculture sector and therefore could not be granted organisational rights.

Lufil Packaging (Isithebe), A division of Bidvest Paperplus (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others[footnoteRef:21] [21: (2018) 39 ILJ 1786 (LC).]

In this case, also involving NUMSA as one of the parties, the CCMA was called to determine whether NUMSA could organise employees falling outside its registered scope. CCMA commissioner after hearing the arguments from both parties, ruled in NUMSA’s favour and granted the union organisational rights. Not happy with the outcomes or ruling, Lufil approached Labour Court (LC) seeking to review the commissioner’s ruling.

In his judgment Gush J sets out the essence of the review application he is required to determine as:

The applicant contended that the provisions of the third respondent’s constitution that sets out the third respondent’s scope of, and the industries in which it is entitled to organise, do not entitle the third respondent to those organisational rights contained in chapter 4 of the LRA. The applicant avers that the operations of the applicant do not fall within an industry in which the third respondent may organise or fall within the third respondent’s scope.

In addition, the applicant avers that the employees’ right to join the third respondent is limited by its constitution. Section 4 by the [sic] of the LRA records the employees’ right to freedom of association and includes the right to join a trade union “subject to its constitution”.[footnoteRef:22] [22: Para 9 and 10 of the judgment.]

Para 28, as far as locus standi is concerned, the conditions precedent to a union wishing to exercise organisational rights, in accordance with the LRA[footnoteRef:23], need to only satisfy two conditions: [23: Act, 66 of 1995 (“the Act”)]

• a) The u must be registered (see sec 11 14 16 18 and 21).

It is common cause that the third respondent is a registered union;

• b) The union must be sufficiently representative (sections 11, 12, 13, 15, 16, 18 and 21) …

In Police & Prisons Civil Rights Union v SA Correctional Services Workers Union & Others (POPCRU (CC))[footnoteRef:24] [24: (2018) 39 ILJ 2646 (CC) POPCRU (CC)).]

The case of POPCRU Constitutional Court (CC) began with a minority union, the South African Correctional Services Workers Union (SACOSWU) and the Department of Correctional Services concluding a collective agreement (the organisational rights agreement) that granted SACOSWU organisational rights to access the workplace for the purpose of representing its members in grievance and disciplinary proceedings and to the deduction of union subscriptions.

This was in spite of a collective agreement regulating thresholds for organisational rights concluded under s 18[footnoteRef:25] between POPCRU and the department. The threshold agreement had been extended to cover non-parties under s 23 (1) (d) of the LRA. POPCRU referred a dispute to the General Public Service Sectoral Bargaining Council, objecting to the organisational rights agreement. It alleged that the agreement was invalid as SACOSWU had not met (and did not meet) the representativeness threshold stipulated by the threshold agreement. However, the arbitrator found in favour of SACOSWU, drawing heavily on the Constitutional Court’s judgment in Bader Bop for support… [25: Act, 66 of 1995]

Second case:

The issue in dispute is:

Whether or not the union is entitled to elect shop stewards at Tolcon’s Mooi Toll Plaza.

In South African Transport and Allied Workers Union obo Members / Tolcon (Pty) Ltd[footnoteRef:26] [26: [2019] 8 BALR 897 (CCMA)]

The union is claiming the right to elect shop stewards at one of four divisions of the employer where it lacked majority to be able to elect shop steward. The respondent administers several road stations on N3. The applicant (SATAWU) concluded the agreement with the respondent in 2012 in respect of three of the stations in terms of which it was require to maintain a membership of 50% + 1 of the employees employed for the entire service contract.

In 2015 the respondent suspended the recognition agreement with the union and gave the union the notice that the agreement would be cancelled if the union did not restore its majority within 30 days, and refused the union’s request to elect the shop stewards at one of the stations.

In case Professional Transport and Allied Workers Union obo members / Professional Aviation Services.[footnoteRef:27] [27: [2016] 4 BALR 421 (CCMA)]

The Commissioner considered section 21 (8)[footnoteRef:28] of the LRA sets out factors which a Commissioner must take into account when resolving a dispute about whether or not a trade union is a representative trade union and held that a key consideration in such matters is the principle of majoritarianism. The commissioner also pointed out that in order to decide whether the applicant was entitled to organisational rights, he had to consider the meaning of “workplace”. [28: Act, 66 of 1995 ]

Section 213[footnoteRef:29] of the LRA states that ‘workplace’ means “the place or places where the employees of an employer work. If an employer carries on or conducts two or more operations that are independent of one another by reason of their size, function or organisation, the place or places where employees work in connection with each independent operation, constitutes the workplace for that operation.” [29: See footnote 28 above.]

Constitutional Law:

Section 23[footnoteRef:30] of the Constitution regulates the right to fair labour practices, including the right of all trade unions to organise workers and to engage in collective bargaining. [30: Constitution, 1996.]

In South African Transport and Allied Workers Union obo Members / Tolcon (Pty) Ltd

The union is looking for the rights in sec 14 of the LRA. Sec 14 (2) states in any workplace in which at least ten members of a representative trade union are employed, those members are entitled to elect from among themselves.

Conclusion

Having read both cases, I found out that both unions are looking for rights even if they are different, because the first one is looking for organisational rights, while the second one is looking for the right to elect the shop steward. They both suffer from the same thing because they lack Sufficient Representative (SR) in order to access those rights. With the above in mind, in these cases I learnt how the Commission, Mediation and Arbitration (CCMA) and the labour courts consider disputes where the trade unions sought to obtain trade union rights outside their scope and how they deal with minority unions.

Bibliography

Statute

1. South Africa. (2015). Labour Relations Act No. 66 of 1995. Pretoria: Government Printer.
2. The Constitution of the Republic of South Africa, 1996, 14th Edition.

Case Law

1. Abanqobi Workers Union obo Members/IR Voigts (Pty) Ltd [2019] 9 BALR 942 (CCMA).
2. Lufil Packaging (Isithebe), A division of Bidvest Paperplus (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (2018) 39 ILJ 1786 (LC).
3. Police & Prisons Civil Rights Union v SA Correctional Services Workers Union & Others (POPCRU (CC)) (2018) 39 ILJ 2646 (CC) POPCRU (CC)).
4. South African Transport and Allied Workers Union obo Members / Tolcon (Pty) Ltd [2019] 8 BALR 897 (CCMA).
5. Professional Transport and Allied Workers Union obo members / Professional Aviation Services [2016] 4 BALR 421 (CCMA).
6. South African Industrial, Commercial and Allied Workers Union / Denny Mushrooms a Division of Libstar Operations (Pty) Ltd

Other Source/s [2018] 5 BLLR 543 (CCMA).

Other Source/s

1. cliffdekkerhofmeyr.com.

Research Title: Importance of Collective Bargaining

Research methodology

The researcher has used Harvard Bluebook Law 20th edition, method of citation. In this paper, the researcher aims to understand the theory and practice of collective bargaining principle, with focus on its practices and evolution in the USA and India, specifically. This paper will delve into the process of collective bargaining, its evolution, importance etc. The researcher will also do a comparative study on the difference, if any, in the practices of collective bargaining in India and the USA.

Research Problem

Collective bargaining is not easily accomplished and is often influenced by a lot of factors one being political decentralization. One of the main issues with the principle of collective bargaining is in choosing whether to pursue centralised or decentralised bargaining[footnoteRef:1]. [1: Villarejo, E., 2020. Progress And Problems In Collective Bargaining. [online] Eurofound. Available at: [Accessed 3 April 2020].]

Decentralization can be defined as “the process by which activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group”[footnoteRef:2].usually trade unions favour centralised collective bargaining as it tends to strengthen the position of the workers. [2: En.wikipedia.org. 2020. Decentralization. [online] Available at: [Accessed 3 April 2020].]

The concept varies from country to country, with each country dealing with their own labour problems. Collective bargaining is merely a gateway to achieving some relief regarding those problems. However, even though it is believed that there is power in numbers, it is easier said than done when the workers’ job is in jeopardy. Hence, this paper will focus on the concept of collective bargaining in specific countries – India and USA, analyse their issues and how the laborers are fighting these issues through the method of collective bargaining.

1. The Evolution of collective bargaining in the USA and India.
2. The importance and scope of collective bargaining.

Research Hypothesis

Collective bargaining can be defined as the “ongoing process of negotiation between representatives of workers and employers to establish the conditions of employment.”[footnoteRef:3]The agreement decided upon in this process may not only be related to wages but other aspects as well such as hiring practices, layoffs, promotions, job functions, working conditions and hours, worker discipline and termination as well as benefit programs[footnoteRef:4]. [3: Augustyn, A., 2020. Collective Bargaining | Definition, Objectives, Functions, Types, & Facts. [online] Encyclopaedia Britannica. Available at: [Accessed 3 April 2020].] [4: Augustyn, A., 2020. Collective Bargaining | Definition, Objectives, Functions, Types, & Facts. [online] Encyclopaedia Britannica. Available at: [Accessed 3 April 2020].]

The practice of collective bargaining has existed in Britain since the 18th century when it was first used by Beatrice Webb who was a founder of the field of industrial relations in Britain. This practice was widely accepted and implemented in the United States of America for settling any industrial disputes. As this further developed in the USA, USA is considered to be the motherland of collective bargaining and this has also spread to India as a method of settling industrial disputes.

In the U.S., collective bargaining takes place between the labour union leaders and the management of the company where the union workers are employed. This sort of agreement produces a “collective bargaining agreement” which establishes the rules of employment for a set number of years. And this is obtained through a certain cost which union workers bear, in the form of “union dues.”[footnoteRef:5] [5: Kenton, W., 2020. What Is Collective Bargaining? [online] Investopedia. Available at: [Accessed 3 April 2020].]

Collective bargaining is a group process involving two parties – the employers and the employees. In this process, negotiations form an important aspect of the process where important terms and conditions are discussed during these negotiations and focuses on resolving any issue of the labour. It is a bipartite process which means that there are only two parties involved in this process.

One of the most important aspects of collective bargaining is that it’s a never-ending process. It continues well after an agreement has been made and is implemented. Moreover, this process does not allow the use of any sort of compulsion to influence the other party into agreeing to any particular terms and conditions. The right to bargain collectively is also recognized through international human rights conventions. It is stated under article 23 of the Universal Declaration of Human Rights, which recognizes the ability to join trade unions as a human right. It is also recognized under item 2(a) of the International Labour Organisation’s declaration[footnoteRef:6]. [6: Lawteacher.net. 2020. Trade Unions And Collective Bargaining. [online] Available at: [Accessed 3 April 2020].]

One of the main reasons for collective bargaining is to fight for better working conditions, mainly increased wages. But does collective bargaining actually result in higher wages and better working conditions? Are labour organizations actually able to increase the wages of all their workers at an equal rate? When considering the economic aspect of this, we can assume that the distribution of labour and capital in a single industry moves in accordance with the elasticity of substitution between labour and capital. This means that, while both labour and capital are utilised in an industry, they also serve as substitutes. Unfortunately, in the case of industries, capital employment is favored over labour employment. Hence, collectively bargaining for higher pay and other benefits may not always result in a positive outcome in such industries.

In such a case, the employer would be more than willing to substitute the labour with capital. As such, it can be observed from this scenario that collective bargaining is not always the solution and does not always work. Especially in industries dominated by machinery, here labour are considered expendable. Collective bargaining would bear no fruit here and the result can never be predicted. This paper will analyse the effectiveness of collective bargaining and refer to cases wherein it has been both a success and a failure.

Q1 “Egyptian Competition Authority (ECA) has announced evidence of collusion in poultry market.” What is collusion? How does it affect supply, demand, production, and prices (show its impact)? What is ECA? What is the case of poultry market in Egypt (give a brief)?

The Egyptian Competition Authority (ECA) has been established in 2005. Its objective is the protection of competition and the prevention of monopolistic practices to ensure free entry and exit from the market and provides the competitors with equal rights and opportunities to compete in all economic sectors, which guarantees a fair competition to all competitors.

Collusion is a term used to show an illegal agreement between people or companies that are usually competitors in a market as they work together to influence a market or pricing for their own advantage. Also, it refers to collective attempts to reduce competition.

Acts of collusion include price-fixing, synchronized advertising, price rigging and sharing insider information. These acts lead to significantly increased prices, which leads to a decline in consumer surplus, and decrease the demand, in addition to allocative inefficiency. Also, it leads to reductions of output and supply. Collusion acts as a barrier to entry that may discourage new firms from entering the market as they aim to exclude new firms to prevent the market becoming more competitive. It make firms lazy and avoid innovation, efforts to increase productivity and efficiency because of the easy profits they gain from collusion.

As we can see in the graph, that collusion restricts quantity produced to Q2, which increase prices to P2 (in the first graph). And producers capture more from consumers surplus (Shaded part in the second graph) which means that consumers surplus decreases.

In Egypt, collusion actions led to the closure of many farms, where 40% of small breeders preferred to exit from the industry. Feed prices have risen from 5000 to 7000 pounds per ton. And cost of feeding birds represents about 70% of the cost of the production process.

The increase in the prices of broiler chicks led to the emergence of many poultry owners and the lack of their capacity to meet this insane price of chicks, and therefore decreased quantities of meatballs, which led to higher prices of chicken to retailers.

Q2- Labor economics is a branch of microeconomics that tries to give better explanation of labor market and deciding wages. What is the role of labor union in affecting the market? What is collective bargaining agreement? How collective bargaining agreement can affect the labor market? Give examples of collective bargaining agreement in Egypt lately.

A labor union is an organization that works with employers to resolve labor issues such as improving workers compensations, benefits, and working conditions, such as regulating labor wages where they use “price flooring” which is a minimum wage set by a regulator or by law that prevents employers to charge wages lower than the floor. Labor union and employees unite to make decisions and represent collective interests of workers that are classified upon their mutual agreements called (Collective bargaining agreement) to resolve any burdens or conditions that affects their work. Labor unions also strive to bring greater fairness and due process to the workplace; as one of their main roles is to resolve disputes in the workplace, they act as an intermediary between employers and business owners. Moreover, labor union leaders are advocates for workers’ rights and benefits through collective bargaining as they are experienced at solving problems through formal arbitration and grievance procedures.

Collective bargaining agreement is a set of negotiations that takes place between employers and a group of employees aimed at agreements to improve and regulate multiple aspects in their work such as determining employees working salaries in addition to regulating working conditions that may affect the cost of labor as it includes number of holidays, and overtime and night shift pay. Another aspect it regulates are employees benefits such as: (vacation days, health insurance, life insurance, dental insurance, etc… ) as well as granting workers compensation and fulfilling their rights. However, some collective contracts also specify which workers can do which jobs through further constraining reallocation of labor within a firm.

The people that are responsible and are mostly involved in negotiating a collective bargaining agreement are HR leaders, lawyers, and their direct reports by delegating these tasks to them; the company must give them the authority to negotiate the terms of the union contract on the company’s behalf. Some of the positive effects of collective bargaining agreement include freeing yourself from the often laborious tasks of compiling wages rates, researching benefits trends, and calculating labor costs and is a huge time saver in negotiating wages, benefits, hours, and working conditions for individual employees, management will be able to negotiate compensation packages for 100 employees in one union contract which will save money as well. Moreover, collective bargaining agreements help to resolve issues and conflicts raised from the workplace as these agreements include clauses on how to resolve potential conflicts between employees and supervisors in a so called grievance process. These contracts provide the process, conditions, and the steps required to either resolve or escalate issues. Workers’ quality of live is also improved due to increased level of pay for workers and improved safety and working conditions. In addition provides an extra level of security for employees and employers in the labor market because both parties are bound to the collective bargaining agreement, if one side or the other is not performing to the stipulations that have been set forth in the contract, then they can be held responsible to them by the injured party.

The Minister of Manpower and Migration (MOMM) supervises and observes collective discussions and agreements. Wages, benefits, and job classifications are set by the government for the public sector. On the other hand, the private sector where Egyptian Trade Union Federation ( ETUF) has weak representation, from which laborers disrespect government rules and requirements on the minimum wage, social security, and other matters as they are not interested in collective bargaining. Some of the examples of Collective Bargaining Agreement in Egypt lately include that:

• Employers should notice and respect the right of employees to freedom of association and collective bargaining.
• Employers should apply to all national laws, regulat,ions and procedures concerning freedom of association and collective bargaining.
• Workers, without distinction whatsoever, shall have the right to establish and to join organizations of their own choosing subject only to the rules of the organization concerned, without previous authorization. The right to freedom of association begins at the time that workers seek employment and continues through the course of employment, including eventual termination of employment, and is applicable as well to unemployed and retired workers.
• Q4) Food subsidy is one of the ancient tools the government uses to affect the market of food. What is food subsidy? Explain using consumer and producer theory its impact? How food subsidies affect prices and production? Give summary of food subsidy situation in Egypt.

Food subsidy is a financial aid paid by the government to the suppliers in order to reduce their costs of production and encourages them to increase output, also the subsidies are financed from general taxation or by borrowing as well as subsidies cause the supply curve to shift to the right and the amount spent on the subsidy is equal to the subsidy per unit multiplied by total output. Subsidies is used to increase the production and decrease the price.

The theory is the consumer and producer surplus, where the consumer surplus: the difference between the highest price consumers are willing to pay and the actual market price of goods, it is found by the area below the demand curve and above equilibrium. While for the producer surplus: it is the difference between the market price and the lowest price a producer would be willing to accept, it is found by the area above the supply curve and below the market price. And both consumer surplus and producer surplus together create an economic surplus.

The price effect of a subsidy is to shift the supply curve downward by the amount of the subsidy. Effectively this is an increase in supply. The impact of the subsidy is to lower prices for consumers but to increase the price received by producers. While for the Marginal subsidies on production will shift the supply curve to the right until the vertical distance between the two supply curves is equal to the per-unit subsidy; when other things remain equal, this will decrease price paid by the consumers (which is equal to the new market price) and increase the price received by the producers.

Statistics are sounding a warning bell about the state of Egypt’s food security, poverty, and malnutrition. The number of food-insecure Egyptians has increased about 21 percent from 2009 to 2011, according to a 2011 analysis of household incomes, expenditures, and consumption. Results for poverty and malnutrition were even more dramatic, with poverty increasing around 25 percent from 2005 to 2011, and, in 2011, almost one-third of children ages 6 months to 5 years suffered from stunting, a direct effect of undernutrition. Anemia rates were at 50 percent for the same age group. A recently released policy note, Tackling Egypt’s Rising Food Insecurity in Times of Transition, produced jointly by IFPRI, the United Nations World Food Programme (WFP), and Egypt’s statistical agency, CAPMAS, delves into the complexity of food subsidies and nutrition in Egypt and offers some policy recommendations for reform. According to the note, the Egyptian government’s food subsidy program is designed to protect the most vulnerable from shocks such as rising food prices, but only 30 percent of Egyptians really need this protection while more than 70 percent receives it. And while the food subsidies did succeed in preventing an even more dramatic spike in poverty during the recent succession of crises, the program is very expensive and not well-targeted to those who need it most. And subsidies may indirectly contribute to malnutrition, as they keep the prices of rationed, calorie-dense foods far below market prices, increasing the relative costs of non-subsidized, often more nutritious, foods.

References

1. https://www.economicshelp.org/blog/21475/economics/collusion-meaning-and-examples/
2. https://en.engormix.com/poultry-industry/articles/poultry-industry-egypt-rise-t40853.htm
3. https://www.concurrences.com/en/authors/info-egyptian-competition-authority
4. https://bizfluent.com/info-7958760-benefits-collective-bargaining-contract.html
5. https://legal-dictionary.thefreedictionary.com/collective+bargaining
6. https://www.bartleby.com/essay/The-Role-of-Labor-Unions-PK6PYWFBYRPS
7. https://www.fairlabor.org/sites/default/files/documents/reports/may-2016-independent-trade-unions-in-egypt_0.pdf