Human Resource is a very pivotal term which determines the success or failure of an organization. Human resource primarily focuses upon concepts related to organizational psychology. The term has come into existence from Economics and refers to labour, which is one of four most important factors of production. The prime endeavour of human resources is to minimize the financial risk involved and to maximize the return invested in capital. This paper will throw light upon the pros and cons of unionization and the impact of the same on productivity in an organization. A comprehensive analysis of all the details pertaining to the same will be analyzed and a conclusion will be drawn in the end.
The British economy has time and again faced a problem of having to deal with deficiency in the skills of its workforce. Research shows that the British workers are far less qualified when compared with other workers across the globe working in industrialized nations. The government has been asked many a time to reform the training in the private as well as the public sector, and they have duly responded by reforming the private sector in order to maximize the return from labour working for different companies in the UK. The British Trade Unions Congress (TUC) began a movement in the late 1980s demanding prioritization of training for the adult workforce so as to ensure that the economy of Britain grows and the workforce prospers by the same.
“This issue should be of concern for all who subscribe to the view that inadequate training provision has been an important contributor to Britain’s industrial decline and that increasing the amount and quality of training is essential to any process of regeneration. A growing body of analysis has shown training to be an area of market failure, stemming from a number of factors.” (Transferable Training and Market Failure, 1993)
Trade Unions that find it difficult to get involved in training often react by demanding that wages for labour should be increased and the possibility of industrial conflict becomes highly likely. The collective bargaining strategy for the 1990s was all about the perceived need for unions to prioritize training. The next part of the paper will throw light upon the pros and cons of unionization.
The Pros and Cons of Unionization on Productivity
One good thing that trade unions show is that the workforce shares a good bond and the same level of frequency but this does not mean that an organization whose workers do not have a trade union do not share the same collectivism. Trade unions have played an integral role in the British political and industrial scene for more than a century. The Labour party was established by trade unions and they also fought for equality and justice. The trade union members role brought them into direct conflict with the members who thought that they were a big threat. The British media viewed the activities of the trade unions as offensive and the same has contributed to a tense situation in the past and nothing much has changed in the same regard to date.
“It is a long time since the series of industrial conflicts (the so called ‘winter of discontent’) which contributed to the defeat of Labour Government in 1979. Thereafter, the changes of Margaret Thatcher’s Conservative Government, in the 1980s, were instrumental in the decline of union membership as the old heavy industries, epitomized by coalmining, shrank considerably.” (Labour Faces Vote of Confidence)
The sole aim of forming a trade union is to ensure better terms and conditions of employment for the labour force, but in doing so, many times workers have arguably forgotten the interest of the organization employing them, and placing their own interests first, which leads to a tense situations and directly affects the productivity of the organization. Trade unions like the Friendly Society ensure that the workforce if provided with good working conditions, the union also takes care of the funeral expenses of the poorer working class so in this regard forming a trade union is very beneficial for the organization as well as for workers. Industrial action refers to strikes, resistance to lockouts etc and this is carried out by the members of the trade union in order to pursue a common goal; this goal can be anything from higher wages to other demands and strikes can reduce the productivity of an organization leading to a loss to both the workers as well as for the employer. A classic example of this is the 1970 strikes in the UK which led to a great many lost days of productivity. The following table shows statistics showing the clear impact of trade union on productivity.
|Industrial disputes in the UK, 1965-98|
|Year||No. of strikes||Workers involved (000)||Days lost (000)|
(Labour Market Trends)
The above statistics give a good estimate of the lost days because of various strikes that have taken place in the UK and the productivity inevitably suffered because of these strikes. It has been almost twenty years since Freeman and Meedof’s ‘What Do Trade Unions Do?’ This work threw light upon how the productivity in the US is affected by various trade unions. They drew a conclusion that unions significantly impact the productivity of organizations.
“Subsequent literature continues to find unions associated with lower profitability, as noted by Freeman and Medoff. Unions are found to tax returns stemming from market power, but industry concentration is not the source of such returns. Rather, unions capture firm quasi-rents arising from long-lived tangible and intangible capital and from firm- specific advantages. Lower profits and the union tax on asset returns leads to reduced investment and, subsequently, lower employment and productivity growth. There is little evidence that unionization leads to higher rates of business failure. Given the decline in U.S. private sector unionism, I explore avenues through which individual and collective voice might be enhanced, focusing on labor law and workplace governance defaults. Substantial enhancement of voice requires change in the nonunion sector and employer as well as worker initiatives. It is unclear whether labor unions would be revitalized or further marginalized by such an evolution.” (What Do Unions Do for Economic Performance)
The paper discussed the pros and cons of unionization and it is quite clear that unionization directly affects productivity; the labour force, in order to satisfy their needs, tries to force various organizations to accept their demands, and if an organization declines to do so, the union members may go on a strike and this adversely affects the productivity. However, a great many industrial problems could arguably be considered the fault of bad management too: many countries with traditionally strong unions, such as Germany, did not suffer the same industrial strife as Britain in the past and strong management-union relationships have often been cited as a reason for this workplace harmony. The statistics presented in this paper give a good account of the lost days in the UK due to various strikes; had strikes not taken place the economy of the UK would not have missed so many productive days. Hence, on the basis of the statistics presented in this paper it can concluded that Trade Unions in the workplace can have a negative impact on productivity, but may also be beneficial. Perhaps responsible trade unions working in partnership with responsible management would be the ideal situation to avoid any ‘them and us’ situation developing and would be beneficial for everyone.
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