Trade unions and management Essay Example for Free

Trade unions and management Essay It is evident from the literature that there has been a sharp decrease in the use of collective bargaining between trade unions and management in deciding employment agreements for employees (e. g. Milner, 1995; Poole Mansfield,1993). Many authors argue that movement towards the individualization of employment relations is replacing the traditional collectivist approach, with the individual negotiation of personalized employment agreements becoming increasingly more favoured over the collective negotiation between trade unions and managements (Milner, 1995; Welch Leighton, 1996). Within this essay, individualism and collectivism mainly revolve around the employment agreement, which is described by Welch and Leighton (1996) as being the main legal mechanism for establishing the rules of work for the employer and individual employees. Brown et al. (2000, p. 616) define the employment contract as being the outcome of a transaction that encompasses both the entitlements and the obligations of the employee. These entitlements encompass commonly associated factors such as pay and fringe benefits, however, what is commonly forgotten is that contracts also regulate the obligations placed on employees such as workloads and job descriptions (Brown et al. , 2000). These are elements that can be either negotiated collectively or individually. In this essay we commence by outlining the meanings of collectivism and individualism the different dimensions of collectivism and individualism in employment relations, and the relations between them. Then we discussed how the movement from collectivism to individualism has been expressed in the pay systems. Collectivism and Individualism Individualism has been viewed as closely associated with unitarism as it suggests shared interests and therefore a preference for a relationship between the individual employee and the manager which is direct and unmediated by collective employee representation. Pluralism has been viewed as being related to collectivism in that this perspective implies conflicting employee-management interests and consequently a preference for collective institutions and procedures in the form of trade unions or collective bargaining. However it has been argued that the tendency to equate unitarism with individualism and pluralism with collectivism in this way fails to do justice to the complexity of management approaches as they relate to the individual and the collective at the workplace(Purcell 1987 cited in the book by Ian Kessler John Purcell, 2003). Notions of individualism and collectivism have been used to characterize distinct but related dimensions of the employment relationship(Ian Kessler John Purcell,2003). Individualism directs attention to how employers manage the individual employee while collectivism encourages a focus on how employers address and deal with collective or representative institutions. Phelps Brown talks of ‘the sense of common interest and common purpose. ’ that united union members in the past (1990:11) and depicts post –war trade unionism as ‘A movement, and not simply a federation of bodies with common purposes. Its members were accustomed to address each other as brothers and sisters, and they did indeed feel a fraternal obligation to support one another. Within the ground rules of democracy, they saw themselves as committed to an adversarial approach in industrial relations and to a radical change in social and economic institutions. (1990:4)’ Trevor Colling (2003) explains that the problem with such perspectives is that they overstate the previous strength of collective identities and, in doing so, depict the current crisis of collectivism as being without precedent and unfathomably deep. Rise and decline of collective bargaining Collective bargaining is defined as ‘a voluntary, formalized process by which employers and independent trade unions negotiate, for specified groups of employees, terms and conditions of employment and the ways in which certain employment-related issues are to be regulated at national, organizational and workplace levels. ’ Lewis, Philip, Thornhill, Adrian, Saunders, Mark (2003). William Brown, Paul Marginson and Janet Walsh (2003) described collective bargaining as a term used when employers deal directly with the trade unions representing their employees in order to regulate the conduct and terms of their work. Flanders (1968) noted that collective bargaining does not involve the actual sale or hire of labour; it is a rule –making process which determines and regulates, in varying degrees, the terms on which individuals will be employed. Purcell reinforced industrial relations origins and strong traditional links with collectivism through the following quote. ‘The study of industrial relations grew out of a recognition that principles of wage fixing in industry, the pursuit of industrial citizenship and the determination of conditions of employment were most obviously, and best, achieved through collective bargaining between employers and representatives of the workforce. ’ Therefore, it can be stated that the original system of industrial relations had strong links with collectivism. Gunnigle, Turner and D’Art (1998) stated that the extent of collectivism in industrial relations may be accurately gauged through trade union penetration; which includes trade union density, recognition and reliance on collective bargaining. Therefore, the following empirical evidence of the rise and decline of collective employment agreements and trade unions will demonstrate trends in collectivism. Milner (1995) explained the data of collective pay setting institutions in Britain from 1895-1990, providing good data for the percentage of the workforce covered by collective bargaining throughout this period of time. In 1910, 15 percent of Britain’s workforce was covered by collective bargaining. This steadily rose to reach 42 percent by 1933 and 51 percent by 1939, peaking at 73 percent in 1973 (Milner, 1995). When the percentage of employees covered by collective bargaining is combined with those affected by trade boards and wage councils (statutory machinery), Milner’s (1995) data shows the overall coverage percentage peaked after World War Two at 89 percent in 1947. Brown et al. (2000) discovered that the proportion of all employees covered by collective agreements in British workplaces fell from 70 percent in 1984 to 54 percent in 1990, and further to 41 percent in 1998. Brown et al. (2000) also cite that the traditional form of multi-employer, industry-wide or national collective bargaining has significantly reduced from 43 percent in 1980 to 14 percent in 1998. Poole and Mansfield (1993) discovered in their study of managers who were also members of the British Institute of Management that the proportion of managers actually involved in collective bargaining dropped from 20 percent in 1980 to 17. 4 percent in 1990, which is a minimal drop when compared to the findings of other studies. However, Poole and Mansfield (1993) interestingly found that informal meetings between managers and union representatives had substantially declined, with 48. 5 percent of managers engaging in such practices in 1980 whilst only 31. 3 percent did in 1990. This trend of union membership rise and decline in Britain is clearly typified by Figure 1, extracted from Disney, Gosling and Machin (1995, p. 404). Although the above data is only from Britain, it is clear from the literature that the decline in trade union membership is not isolated to Britain. Harbridge and Crawford (2000) cite evidence that virtually all OECD countries have experienced negative or reduced employment growth, and that throughout the 1980’s union density fell in all OECD countries except Finland, Iceland and Sweden. The arrival of a government in 1997 that was more sympathetic to trade unions, and the subsequent passing out of the 1999 employment relations act, has tended to reverse the trend towards complete withdrawal from collective bargaining, and even to encourage ‘re-recognition’ of unions in many firms. But this reversal appears to be very much on terms laid down by employers. Factors contributing to decline in collectivism One of the major and most complex factors literature mentions as contributing to the decline in collectivisation relates to the corresponding decline in trade union membership and hence trade union power. Purcell (1993) explains that membership fees are the most important way for trade unions to collect their revenue, and from this it can be extended that if membership declines, then so does the trade unions income and hence power and financial ability to protect its members. Trade unions are the collective force that drive collective bargaining within employment agreements, and the weaker they get, the weaker the influence of collective bargaining. Brown et al. (2000, p. 612) support this link between the strength of trade unions and collective bargaining, and suggest factors that may have contributed to the recent decline in both areas through the following statement: ‘During the previous two decades the membership of trade unions and the coverage of collective bargaining had contracted substantially, battered by Competitive, legal and structural change. ’ Purcell (1993) cites a number of legal changes in Britain that have contributed to the decline in the power and influence of trade unions and collective bargaining. These include abolishing the closed shop, requiring balloting for strike action, and making unions vicariously liable for a wide range of industrial action contemplated or conducted by union representatives or their members (Purcell, 1993). Actions such as these that limit the trade union rights to use industrial action give a big disadvantage to the unions, as industrial action is one of the main tools unions use against the employers (Welch Leighton, 1996). Because of this many employees leave the trade unions or see no point in joining them because the unions do not have the power to represent their views in an effective manner; they are paying the union fees for no benefit (Purcell, 1993; Welch Leighton, 1996). Decisions taken by the employers can also contribute towards the derecognition of trade unions leading to individualism of employment relations. Tuckman and Finnerty (1998) argue that without trade unions employers are able to pressurize the employees to accept reforms . Purcell explains that shifting to single employer bargaining enables firms to easily bring in new payment systems and grade structures and also enables the firms to link the management of labour to product market instead of the external labour market. There is also a view that says Individualised contracts allow employees to negotiate terms and conditions related to their needs as they are directly involved in the bargaining, especially in terms of factors such as performance related pay(Tuckman Finnerty,1998). Managers have also been assumed to prefer the unitary system of industrial relations within the work place compared to the pluralist system(Poole Mansfield, 1993). This unitary approach is linked to individualisation of the employment contracts, with employers and employees negotiating together to discuss the terms and conditions of employment contracts. In contrast the collective approach is viewed as being very pluralist in nature due to trade unions from outside the workplace being brought in to negotiate employment conditions or advocate for employees rights. Purcell (1993) asserts that employers have changed their tactics concerning trade unions to reflect this change to unitarism by deciding to compete with trade unions rather than confronting them, thereby reducing the need for employees to contemplate union membership. Trevor Colling (2003) identifies three variants of explanation for the decline in collectivized employee relations. Those suggesting that decline has been secular emphasize the absence of demand for collective channels of representation and explain this by shifts in the composition of the economy and labour markets. Others point to high-commitment strategies and the extent to which employers have been successful in garnering the trust and allegiance of their employees. Some see the trend as a strategic one, created by deliberate employer actions, facilitated by state policy, to secure managerial prerogative and close down joint regulation. Ian Kessler and John Purcell(2003) explains that since the 1979 changes in the state’s conception of good industrial relations, linked to the decline in union strength ,have allowed management greater choice over which style of employee management to adopt. Ian Kessler and John Purcell (2003) points to some calls for a move towards non-union forms of individualism, particularly among key employer organizations. Howell (1995: 163) notes how in the late 1980s the institute of directors called for: ‘The almost complete individualization of industrial relations, meaning individual pay contracts and merit pay in place of national agreements and collective bargaining, employee shareholding, individualized training, and either the elimination of any role for the trade unions or a minimalist role in which trade unions provide services for their members but do not engage in collective bargaining and have a limited right to strike. ’ Changes in the level of collective bargaining, in particular a move towards decentralization from multi-employer to single-employer, and from single employer to multi-plant, may also be an important indicator of the decline in collective industrial relations ( Mcloughlin, I and Gourlay,S,1993). The wide spread introduction of the system of Human Resource Management (HRM) has been postulated to be a large contributor to the move away from trade unions and collective bargaining towards unitarism and individualized contracts, and this will now be discussed.