The Correlation Between Unionization And Productivity

2168 words - 9 pages

Before a proper analysis can be completed on the current issue of whether unions are more productive, it is necessary to develop an understanding on what effects they have on the workplace and how it impacts management decisions and in particular the policies that will be created as well as enforced by human resource management so that the organization is compliant will all aspects of the collective agreement, should one be in force at the time. This agreement is at the core of the employer-union relationship since it expressly outlines all benefits of workers as well as the necessary behaviour of management, anything outside of this legal arrangement falling onto the authority of the employer under the context of “management’s rights”. (Verma, 2005, p. 418) Taking this newfound relationship into consideration, the realistic effect that unions now have on the workplace is their “strong use of their monopoly power to force employers to pay significantly better wages and benefits.” (Verma, 2005, p. 416) These are the aspects of labour relations that are the most prevalent and visible to the general public; however, there are other areas where unions have a major impact, referred to as “industrial jurisprudence where the union, both their leadership and members gain a significant voice in almost all aspects of managerial decision-making that can have major consequences, not only for the workers, but the organization as a whole.” (Verma, 2005, p. 416) According to this same author, the primary motivation for unions to behave in this manner rests on the pursuit of fairness and to achieve more favourable working conditions as well as maintaining a strong voice in workplace matters. (Verma, 2005, pp. 416-418)
The overarching effect is that management is now forced to seek other areas to achieve optimal efficiency; one method of which is commonly used is to “substitute capital in lieu of far more expensive labour. This ends up leading to a sub-optimal allocation of resources, since the new production is inefficient, compared to the previous situation had the workforce not been unionized. This is what is known as the price effect of unions, which is an increase in the price of labour.” (Verma, 2005, p. 417)
Indeed there is evidence that unionization is may not lead to increased productivity, one study conducted on roughly “900 businesses that are responsible for either manufacturing, supply chain, raw materials etc. found no favourable productivity effects.” (Meador & Walters, 1994, p. 374) Adding to this is data from studies done on U.S. manufacturing firms that discovered that unionization actually decreased average labour productivity significantly. (Meador & Walters, 1994, p. 374)
While these results do not conclude that unions have a complete 100% negative impact on productivity, it does emphasize that within many organizations
For a later section!
Despite the negative effects that unionization may have on productivity and/or organizational...

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