TradeUnion_Law

8/7/2019 TradeUnion_Law

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ROLE OF TRADE UNION INEMPLOYEES COMPENSATION

Presented By :

Shubhi Singh BBA4530/09

Meenakshi Karhana BBA4537/09


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TRADE UNION

According to Trade Unions ACT 1926, A Trade Union is any combination ofpersons whether temporary or permanent primarily, for the purpose ofregulating the relations either between workers & employers or betweenworkers & workers , and for imposing restrictive conditions on the conduct ofany trade or business and includes the federation of two or more Trade Unions.


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TRADE UNIONS

OBJECTIVES

1. To secure and, if possible, improve the living standards and economicstatus of its members.

2. To enhance and, if possible, guarantee individual security against threatsand contingencies that might result from market fluctuations,technological change, or management decisions.

3. To influence, power relations in the social system in ways that favourand do not threaten union gains and goals.

4. To advance, the welfare of all who work for a living whether unionmembers or not.

5. To create mechanisms, against the use of arbitrary and capriciouspolicies and practices in the work place.


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FACTORS LEADING TO

EMPLOYEE UNIONIZATION

Following factors play role in origin of Employee Unions:

1. Working Environment : Inadequate staffing , Mandatory overtime, Poor workingconditions.2. Compensation : Non-competitive pay, Inadequate benefits, Inequitable pay raises.3. Management style : Arbitrary Management Decision Making, Use of fear, lack of

recognition.4. Organization treatment : Job insecurity, Unfair discipline and policies,

harassment and abusive treatments, not responsive to complaints.


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Individuals join Unions for many different reasons, and these

reasons tend to change over the time. They may involvedissatisfaction with management in terms of

compensation, job security and management attitude;

need for a social outlet to increase the sense of solidarity,

opportunity for leadership for the Union leaders into

managerial ranks as Supervisors,forced Unionization because the right to work laws

instigated by Indian Government and,

peer pressure of the members of the work group.

A Union is an organization that represents Employees

interest to management on issues such as wages, workinghours and working conditions.


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COLLECTIVE BARGAINING

Under the Collective Bargaining system, Union and Management negotiate

with each other to develop the work rules. The performance of the mutualobligation of the Employer and the Representative of the employees to meetat reasonable times and confer in good faith w.r.t. wages, working hours andother terms and conditions of employment, or the negotiation of anagreement , or any question arising there under, and the execution of awritten contract incorporating any agreement reached if requested by either

party; such obligation does not compel either party to agree to a proposal orrequire the making of a concession.


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COLLECTIVE BARGAINING

PROCESS

The first step in the Collective Bargaining Process is preparing fornegotiations. This step is often extensive and on-going for both Union andManagement. After the issues to be negotiated have been determined, the

two sides confer to reach a mutually acceptable contract.The next step is for the union membership to ratify the agreement. There is afeedback loop from Administration of the agreement to preparing fornegotiations.

Collective bargaining is a continuous and dynamic process, and preparing forthe next round of negotiations often begins the moment a contract is ratified.


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ROLE OF TRADE UNION IN WAGE

DETERMINATION

In theory unions might exercise their collective bargaining power topartially offset the purchasing power of an employer in a particular occupationand in doing so achieve a mark-up on wages compared to those on offer to

non-union members.But for this to happen, a union must have some control over the total laboursupplyavailable to an industry. In the past this was possible if a unionoperated a closed shop agreement with an employer i.e. where the employerand union agreed that all workers would be member of a particular union.However in most sectors, the closed shop is now history. Trade union

reforms in the 1980s brought an end to the closed shop in a bid to increase theflexibility of the labour market. Closed shops still exist in a few occupations,for example the actors union but for the vast majority of workers, this is nolonger a relevant issue.


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More frequently, a union may simply bid through bi-lateralnegotiations with employers to achieve an increase in wages

ahead of the rate of inflation so that real wages rise, and otherimprovements to working hours and conditions. It is often thecase that employers will insist on some form of performance-related element to any pay settlements, for example anagreement on measures designed to boost productivity.

The balance of power between employers and trade union in theirperiodic wage negotiations depends on a range of factors:

1. The rate of unemployment - when labour is scarce, either ina local labour market or taking a national perspective andthere are perceived shortages of skilled workers, then the

balance of power tilts towards unions.


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2. Competitive pressures in product markets whena firm is enjoying a dominant monopoly position and

high levels of abnormal profit, the unions will know thatthe employer has the financial resources to meet a moregenerous wage settlement (although unions rarely havethe full financial information available to a business attheir finger tips when negotiations are in progress).When demand for a product is price inelastic, so the

demand for labour will tend to be relatively inelastic, thisgives the union the opportunity to boost the totalearnings of its members through collective bargaining.The reverse is true in markets where demand for the finaloutput is highly elastic.

Globalization is making the derived demand for labourmore elastic and leading to a decline in the ability ofunions to drive wages high, independent of the level ofproductivity in an industry.


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3. Macroeconomic conditions - during a recession or wherecompetitive pressures in a market are intense and profit

margins have been squeezed the employer is far less likely toaccede to ambitious pay claims. The strength of the exchangerate for example is often a key factor in pay discussions forfirms who export a large percentage of their total output.When unemployment is rising, growing fears for job securityalso affect pay demands. Unions are always less powerful when

the demand for labor is falling and labor is less scarce.


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The diagram below shows how collective bargaining mightlead to the market wage rate being bidded-up or where aunion operating a closed shop might restrict the laboursupply to put upward pressure on wages. In theory wages forunion members can be raised above those of non-members,but there is a potential trade-off with employment and theextent to which unions are prepared to risk a loss of jobsmay determine how high they set their wage demands.


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THANK YOU


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