Tradeoffs In Negituation Between The Management and The Labor Unions example

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Tradeoffs In Negituation Between The Management and The Labor Unions

The wages increase is the most common subject for the negotiation between the management and the labor union. The tradeoffs for increased wages from the management side depends on the scale of the increase; if it is reasonable, then the employer can concede a portion of their expenses to improve employees’ job satisfaction and productivity.

According to Ajalat (2004) management of the companies frequently perceives union establishment as the factor that increases the labor costs, worsens the level of profitability of the company. Thus, the security of the company is jeopardized. Moreover, management representatives emphasize the necessity to pay union dues for employees without any guarantee that additional benefits for them will be gained. Finally, it is underlined, under the union functioning employees cannot address the problems and concerns that they have directly.

The above mentioned thoughts are partially true. At the same time, Ajalat (2004) points out that historically employees received higher wages being the members of the union and they were more protected from employer’s deeds such as the termination at will. Under the tough competition in the global economy the companies downsize their facilities, use outsourcing strategy to hire employees as well as maximize the productivity level for the current number of employees. Regarding the above stated, the increase in wages as the outcomes of the negotiation between the union and management should be considered from the volume perspective. If the demanded growth is tremendous such as the example of doubling the pension benefits for GE workers (Bernstein, 2003), then the employer will never agree to such a request, because business is not the charitable organization, it should be profitable. And, if it will agree, then in several years all other employees will be fired due to the poor financial state of the company.

At the same time, employer will negotiate the reasonable increase in wages related to the inflation growth. Employees’ morale tends to be higher when the employees feel that they are treated with respect and dignity and their concerns are listened to. The employer expects the increased productivity in such a case.


Ajalat, P. B. (2004). Union organizing, negotiations and contract administration: Perspectives of a former union-lawyer now laboring for management. The Metropolitan Corporate Counsel, November 2004, 22.

Bernstein, A. (2003). GE and labor: This could get ugly. BusinessWeek, June 2, 54 …

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