Bargaining Power Shifts in Recessions

In the event an economic recession takes place, both the unions and management do have a shift in bargaining. Power owing to the financial constraints and market pressures. During a recession, the management may seek to cut costs, including the wages. Benefits to ensure they maintain profitability and viability of the business. As a result, the bargaining power of the unions is diminished since they may encounter resistance to demands for higher wages or improvement in the working conditions.

An example is during the 2008 recession when the United Auto Workers. (UAW) were encountered severe challenges during their negotiations with Ford, General Motors and Chrysler. The companies were struggling with financial losses and as a result. Demanded for concessions from the unions to reduced cost of labor and enhance their competitiveness (Kesselman). The UAW had to institute a number of concessions such as reduced. Benefits and wage freezes to assist in stabilization of the companies amidst the turmoil.

Discussion 2

From a management’s perspective a strike can have the advantage of assisting in control of the labor costs especially if the strike results in concessions by the union concerning wages and benefits. The management is also capable of restructuring operations, potentially improving on competitiveness and efficiency. The strikes may however have the disadvantage of disrupting operations resulting in financial losses and damage to the reputation of the company.

From a union’s perspective, a strike does help by functioning as a crucial tool that serves in the negotiation for better working conditions, benefits and wages. The strike helps in demonstrating the collective solidarity and strength of the unions, resulting in increased bargaining power for the union. The strikes do however have the disadvantage of resulting in financial hardships for the union members that lose their wages during the strike. The strikes being prolonged may also strain the relationship between the management and union, impacting on long term engagement. APA