Chapter 10 - Contract terms and employment outcomes. The main contents of the chapter consist of the following: Tracing the effects of union wage increases, union effects on employment conditions, union effects on wage administration, union effects on fringe benefits, union effects on work rules, management's response to work rules. | Chapter Contract Terms and Employment Outcomes 10 McGraw-Hill/Irwin An Introduction to Collective Bargaining & Industrial Relations, 4e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved. Tracing the Effects of Union Wage Increases An increase in wages may result in a corresponding, automatic “roll up” in fringe benefits such as sick leave, vacation, pensions, and unemployment benefits Such wage or benefit increases may pressure the firm to hold down costs by tightening work rules These “primary direct effects” of unions set off a chain reaction 10- The Consequences of Union Effects on Wages 10- Stage 1: Primary Union Effects The primary union effects are on the compensation received by their members If unions did not raise wages, they would have difficulty attracting and keeping members Thus, the primary effect is positive The critical question concerns the size of this and other primary effects 10- Stage 2: Management Adjustments Motivation is to recoup the costs associated with union-negotiated improvements in wages through productivity increases Management adjustments may include: Reduction in output or employment Increase in product price Substitution of capital for labor 10- Stage 3: Secondary Union Effects The union may react to management adjustments Union may seek more elaborate job security language Seek stricter seniority rules in subsequent contract negotiations These represent secondary union effects on employment conditions 10- Escape and Takeovers as Responses The option of finding a nonunion alternative location or way to get work accomplished There has been an increase in such responses in recent years Another possibility is for a different firm to take over the operation and extract concessions 10- Union Effects on Employment Conditions The primary and secondary effects of unions on pay and working conditions depend on the union’s bargaining power How do union worker earnings compare to earnings if there | Chapter Contract Terms and Employment Outcomes 10 McGraw-Hill/Irwin An Introduction to Collective Bargaining & Industrial Relations, 4e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved. Tracing the Effects of Union Wage Increases An increase in wages may result in a corresponding, automatic “roll up” in fringe benefits such as sick leave, vacation, pensions, and unemployment benefits Such wage or benefit increases may pressure the firm to hold down costs by tightening work rules These “primary direct effects” of unions set off a chain reaction 10- The Consequences of Union Effects on Wages 10- Stage 1: Primary Union Effects The primary union effects are on the compensation received by their members If unions did not raise wages, they would have difficulty attracting and keeping members Thus, the primary effect is positive The critical question concerns the size of this and other primary effects 10- Stage 2: Management Adjustments Motivation is to .
