World Bank: Unions Good for the Economy

[Neil]

There is not one example of a company, corporation or transnational that went "into the ground" because of a union.  Nice try, though.

Airlines.  Autos.  Steel.

Airlines?  The troubles with the airline industry are a lot more complex than unions, although labour costs are a problem for them.  The price of fuel has doubled, and redoubled, and redoubled again since the jet-setting days of the 70s.  The no-frills, low-cost airlines have applied a downward pressure on ticket prices, even though fuel, security, aircraft, maintenance and labour costs have all gone up.  The big, full-service airlines are having their margins eaten up.  That's why air travel is so affordable.

[Sheilbh]

Employers need employees to dig in the dirt and operate machinery.  They don't need unions.  There's nothing at all irational about trying to break a union.

I never said it was irrational, it's an intellectual failing that's led to as many problems by employers as the 'union mentality' has on that side.  It is I think a large part of what leads to a culture of hostility and confrontation in industrial relations.

There's enough truth in it that it leads to the zero-sum attitude by employers and an unwillingness to compromise or negotiate because often they'd rather do that than have to work with a union now and in the future.  The view that their interest is best advanced by atomising the workforce and smashing the unions rather than trying to work out a shared interest of increasing productivity - a la Rhineland capitalism.

Do you mean to say that the company could have made more money if they had given in to the union's demands?  I suppose this case is a little complicated by the state ownership.

Well the union didn't have any demands in the normal sense.  They were more or less out to smash the government.  It was always and entirely political.  The NCB shut down a few hundred mines and fire 20 000 miners, as a prelude to privatisation. 

It was a state-owned country with a CEO appointed by the PM who was known for a pretty brutal approach to reducing costs.  With a couple of exceptions the majority of the mines in more Tory supporting areas weren't to face as many closures in the first round (until the union was broken in their heartland), she'd hugely prepped the police for this and, as I say, had been stockpiling coal for over a year.

The goal was never to try and find a way of making the NCB more money, or for the NUM's part to negotiate a deal.  It was a battle to the death.

[Admiral Yi]

I never said it was irrational, it's an intellectual failing that's led to as many problems by employers as the 'union mentality' has on that side.  It is I think a large part of what leads to a culture of hostility and confrontation in industrial relations.

There's enough truth in it that it leads to the zero-sum attitude by employers and an unwillingness to compromise or negotiate because often they'd rather do that than have to work with a union now and in the future.  The view that their interest is best advanced by atomising the workforce and smashing the unions rather than trying to work out a shared interest of increasing productivity - a la Rhineland capitalism.

All you need now is a real world example of a union that demonstrated a willingness to adopt cooperative Rhineland style capitalism and was met by a spiteful management bent on smashing the union rather than increasing profits.

Well the union didn't have any demands in the normal sense.  They were more or less out to smash the government.  It was always and entirely political.  The NCB shut down a few hundred mines and fire 20 000 miners, as a prelude to privatisation. 

It was a state-owned country with a CEO appointed by the PM who was known for a pretty brutal approach to reducing costs.  With a couple of exceptions the majority of the mines in more Tory supporting areas weren't to face as many closures in the first round (until the union was broken in their heartland), she'd hugely prepped the police for this and, as I say, had been stockpiling coal for over a year.

The goal was never to try and find a way of making the NCB more money, or for the NUM's part to negotiate a deal.  It was a battle to the death.

So where's the "provoking a strike" part?  Privitization?  Which, incidentally, sounds very much like making the NCB more money, or more accurately, reducing its losses.

[Tonitrus]

There is not one example of a company, corporation or transnational that went "into the ground" because of a union.  Nice try, though.

Airlines.  Autos.  Steel.

Airlines?  The troubles with the airline industry are a lot more complex than unions, although labour costs are a problem for them.  The price of fuel has doubled, and redoubled, and redoubled again since the jet-setting days of the 70s.  The no-frills, low-cost airlines have applied a downward pressure on ticket prices, even though fuel, security, aircraft, maintenance and labour costs have all gone up.  The big, full-service airlines are having their margins eaten up.  That's why air travel is so affordable.

Not to mention masochistic passengers who gobble up those low-fair, cattle-car seats at the expense of comfort...and then complain ad naseum about said lack of comfort.  And leave the rest of us, sensible people being stuck with no leg room.   

[katmai]

Yip is off the Christmas card list.

Perfect example.  katmai works in a protected industry and grows rich off my $12 movie tickets.  In exchange for which I get a Christmas card.

say what now? 

[Sheilbh]

All you need now is a real world example of a union that demonstrated a willingness to adopt cooperative Rhineland style capitalism and was met by a spiteful management bent on smashing the union rather than increasing profits.

Why does that matter when discussing 'company mentality'?

Edit:  Though as I say Clydeside, Tolpuddle and the Miners strike were all more about smashing the union than the economics.  Clydeside even led to a work-in by the union.

So where's the "provoking a strike" part?  Privitization? 

She went out of her way, personally, to hire a man who was best known for cutting half the workforce of a company and he was instructed by her to be strong.  At the time even Tory backbenchers described the appointment as provocative.  He was to reorganise the company before privatisation and was promised a lot of support.

Which, incidentally, sounds very much like making the NCB more money, or more accurately, reducing its losses.

So?

[Admiral Yi]

This is going nowhere Shelf.

[Sheilbh]

This is going nowhere Shelf.

I agree.  I'll try and simplify.

Your point about union mentality is at best a partial view of American industrial relations, at worst just nonsense supported by cherry-picked and incomplete moments in history.
A lefty could just as easily make that point about a 'management mentality' that focused more on smashing unions than working with them, even through uneconomic individual pay deals, with just as much cherry-picking of incidents.
It would also be nonsense.

Despite that there are examples of unions believing that what matters is their strength not the actual economic situation or whatever else, and of management mainly being motivated by a desire to shut the unions down.  The miners strike is probably an example of both, the economics of coal mining wasn't even third fiddle in that dispute.

[Admiral Yi]

I agree.  I'll try and simplify.

Your point about union mentality is at best a partial view of American industrial relations, at worst just nonsense supported by cherry-picked and incomplete moments in history.
A lefty could just as easily make that point about a 'management mentality' that focused more on smashing unions than working with them, even through uneconomic individual pay deals, with just as much cherry-picking of incidents.
It would also be nonsense.

Despite that there are examples of unions believing that what matters is their strength not the actual economic situation or whatever else, and of management mainly being motivated by a desire to shut the unions down.  The miners strike is probably an example of both, the economics of coal mining wasn't even third fiddle in that dispute.

I agree that Germany and the Scandis seem to have figured it out.

I don't think I'm cherry picking examples.  In case after case after case unions fought for more money after changes in market conditions had weakened their employers' pricing power.

You have postulated an equivalence on the management side, but have failed to provide a single example of companies cutting off the union nose to spite the profit face.  You've similarly postulated management unwillingness to cooperate with reasonable union requests but have failed to provide a concrete example.

[Sheilbh]

I'm not postulating any equivalence.  I've said a lefty could and you're both wrong. 

My view is that culture matters more than 'union mentality'.  Unions and companies are basically positive things for everyone but they're sort of neutral and I think their conduct is more shaped by history and culture than their position as union and employer or any 'mentality'.  In the UK I think that more often than not both sides have been destructive and confrontational.  But we've lost out by the unions having been so wildly routed.

In terms of management unwillingness with reasonable union requests I think the bus driver strike yesterday was one.  All other transport workers will get a £500 bonus for the Olympics.  The bus companies negotiated a far lower deal with bus drivers, who now want the same that all other TFL workers are getting.  The Mayor's negotiated a deal that would cover the costs for the bus companies, but they're refusing to get back to negotiations (that's the media reports I've read at least, Boris is, naturally, blaming 'militant' union leaders and the companies). 

There's numerous examples in the airline industry, especially with BA.  It's arguably motivated by future profit (though so's the union demands) but I think there are many examples of companies wanting to send a message or, perhaps because they've had serious industrial action issues in the past, wanting to do whatever it takes to smash the unions.

My understanding is that companies are more reluctant to use ACAS (binding arbitrators) than unions.

Edit:  Incidentally I think you're also missing that when market conditions have changed is probably when a union's negotiating position is strongest.  Obviously they can go too far and inadvertantly kill the goose, but it's when management's normally weakest.

Also if the market conditions aren't industry specific then it's the time when the unions have to act to prove their worth to their members by preserving or advancing their position.

[Iormlund]

You have postulated an equivalence on the management side, but have failed to provide a single example of companies cutting off the union nose to spite the profit face. 

Oh that happens here a lot, for example when it comes to time flexibility. As a simple example, I'm on a 30 hour week because my employer wouldn't allow me to work for 8h straight instead of having a 2 and half hour lunch "break".

[Admiral Yi]

I'm not postulating any equivalence.  I've said a lefty could and you're both wrong.

OK, I misunderstood your point earlier.

The problem here for you is that it's a simple empirical question.  Did the UAW continue to demand increases in compensation when the Big Three were getting clobbered by the Japs?

My view is that culture matters more than 'union mentality'.  Unions and companies are basically positive things for everyone but they're sort of neutral and I think their conduct is more shaped by history and culture than their position as union and employer or any 'mentality'.  In the UK I think that more often than not both sides have been destructive and confrontational.  But we've lost out by the unions having been so wildly routed.

The problem here is that a destructive and confrontational union ends up killing the golden goose.  A confrontational employer doesn't do that.

In terms of management unwillingness with reasonable union requests I think the bus driver strike yesterday was one.  All other transport workers will get a £500 bonus for the Olympics.  The bus companies negotiated a far lower deal with bus drivers, who now want the same that all other TFL workers are getting.  The Mayor's negotiated a deal with the bus companies to cover the costs, but they're refusing to get back to negotiations (that's the media reports I've read at least, Boris is, naturally, blaming 'militant' union leaders and the companies). 

There's numerous examples in the airline industry, especially with BA.  It's arguably motivated by future profit (though so's the union demands) but I think there are many examples of companies wanting to send a message or, perhaps because they've had serious industrial action issues in the past, wanting to do whatever it takes to smash the unions.

My understanding is that companies are more reluctant to use ACAS (binding arbitrators) than unions.

And bus drivers requesting 500 pounds more is cooperative how exactly?

Edit:  Incidentally I think you're also missing that when market conditions have changed is probably when a union's negotiating position is strongest.  Obviously they can go too far and inadvertantly kill the goose, but it's when management's normally weakest.

Also if the market conditions aren't industry specific then it's the time when the unions have to act to prove their worth to their members by preserving or advancing their position.

Here you're advancing my thesis for me.

[Sheilbh]

The problem here for you is that it's a simple empirical question.  Did the UAW continue to demand increases in compensation when the Big Three were getting clobbered by the Japs?

Well I don't know and I don't think it matters.  I'm entirely ignorant about this all except what I've read on the recent bailout.  I've said before that my impression is that American unions are far more corrupt than European ones.

The problem here is that a destructive and confrontational union ends up killing the golden goose.  A confrontational employer doesn't do that.

Except that it does, because all workers end up with lower job security, less benefits and slower wage growth - this returns to my point that those are consequences of the decline of private sector unionisation certainly in the UK (and probably elsewhere).

And bus drivers requesting 500 pounds more is cooperative how exactly?

It's not.  It's reasonable.

Here you're advancing my thesis for me.

How so?  Unions exist to protect and advance their members interests.  When the company's weak is the moment when they're best placed to do so. 

They've got to strike a balance between that and asking for too much.  They should also try to negotiate deals that will improve long-term productivity.  So better benefits, or a wage rise - but also changes to working practices/hiring freezes etc.  Again this is relatively normal in Northern European economies.

[Admiral Yi]

Well I don't know and I don't think it matters.  I'm entirely ignorant about this all except what I've read on the recent bailout.  I've said before that my impression is that American unions are far more corrupt than European ones.

  I'm proven wrong, you don't know, and you're entirely ignorant?  WTF Shelf.

Except that it does, because all workers end up with lower job security, less benefits and slower wage growth - this returns to my point that those are consequences of the decline of private sector unionisation certainly in the UK (and probably elsewhere).

You misunderstand my point.  If a union drives a company into the ground they're killing the golden goose that lays the egg of their employment.  If a company breaks a union they're not killing the golden goose of their profits.

How so?  Unions exist to protect and advance their members interests.  When the company's weak is the moment when they're best placed to do so. 

They've got to strike a balance between that and asking for too much.  They should also try to negotiate deals that will improve long-term productivity.  So better benefits, or a wage rise - but also changes to working practices/hiring freezes etc.  Again this is relatively normal in Northern European economies.

And not so normal in the US and UK.  QED.

[MadImmortalMan]

There's enough truth in it that it leads to the zero-sum attitude by employers and an unwillingness to compromise or negotiate because often they'd rather do that than have to work with a union now and in the future.

Not justifying this, but the rules often say that any contact between any representative of the company and the union immediately activates the union and gives it legal rights it didn't have before--because that is de-facto recognition of the union's status as negotiator for the company's workers.

Remember that thing in Canada where the US Army sergeant responded to an email or something and then all hell broke loose? That's why.