Types of Unions
Trade unions are non-profit organizations created by employees to advocate and defend their wealth via collective bargaining. A trade union is a group of people. It exists primarily to regulate the ties between employers and employees or amongst employees (Laverty, 2018). It is developed to impose preventive rules on the management of any company or trade. It involves a federation of 2 or more trade unions. It is a group of employees that group together to defend and advance their shared interests via collective agreements. Unions are collective organizations with the main goal of improving the well-being of its members. The goal is achieved mainly via collective bargaining with the employer in Canada. The above process will result in a collective agreement which specify wages; non-wage benefits including those close to medical and health expenses, vacation time and pensions as well as aspects relating to employment including processes close to overtime work, layoffs, dismissal, promotion, hiring as well as dealing with grievances (Fay & Ghadimi, 2020).
Unions are categorized into two; industrial unions and craft unions. Industrial unions are said to represent all the employees in a certain sector irrespective of skill or occupation, for example, forest, steel, automobile industries. Craft unions are said to represent employees in a certain occupation or trade; for example, longshoring, printing, construction trades. However, some unions may combine elements of both types (Gahan et al., 2018).
Unions have played a big role in political and social affairs. In western Europe, there are common close ties between political parties and unions. The union movement offers financial support for the NDP. Unions are seeking to impact the authoring in power, they have been included in different forms of collaboration and consultation with the government. The main role of Canadian unions is to represent the interest of participants in collective bargaining with employers.
The paper starts by discussing the significance and nature and of unions and collective bargaining in Canada. The extent of unionization in the labor force, how this has changed over time, and how it compares with other countries and the legal framework governing unionization and collective bargaining are discussed. It then examines the determinants of the extent and incidence of unionization in the economy. The behavioral implications of unionization and collective bargaining (Garnero, 2021).
What factors impact the labor market’s level of unionization?
How do corporations and unions interact when it comes to determining employment and wages?
How can “bargaining power” be incorporated into a model of firm–union interaction?
Collective bargaining determines wages and other employment conditions for a sizable portion of the Canadian labor force. Table 1 presents various measures of the measurable importance of labor unions in the labor market. When viewed intensely, there is a rising trend until the 1980s, recording a slight drop since then. Union membership as a percentage of the civilian labor force increased from around 9% in 1920 to around 24% in 2019.
Table 1: Union membership and union density in Canada (Hemphill & Marianno,2021)
Role of Unions in Political and Social Affairs
The percentage of salaried employees whose working conditions and salary are enclosed by a collective agreement is the second measure of unionization. In nations such as Canada, Japan, the United States, and the United Kingdom, the majority of negotiating is occurring between a union and the specific employer, and collective agreement established typically don’t encompass other employees. Centralized negotiating at the industry, sector, on the other hand, is typical in several European nations and Australia. Furthermore, agreements established between employers and unions are frequently extended to include nonunion employees in linked enterprises and industries. In certain cases, there might be a significant discrepancy between collective bargaining agreement coverage and union membership (Kjellberg, 2019).
From the early 1900s until the mid-1960s, Canada and the United States saw comparable trends of union expansion, as seen in Figure 1. Since then, unionization trends have contrasted dramatically, with union density gradually dropping in the U.S. while expanding in Canada till the mid-1980, when it began to decline somewhat. As a result, a significant inter-country disparity in the degree of union coverage has evolved, such that from 1980s, the proportion of the Canadian labor force signified by unions has been no less than twice that of the U. S.
Figure 1: Union Density (Leonardi, 2018)
Higher pay and non-wage benefits, increased job stability, and protection against arbitrary management treatment are among possible benefits of union involvement. Direct expenses like union subscriptions and time given to union events, possible loss of revenue in the case of a work slowdown, and costs connected with the actions of the employer if the employer is willing or discourages unionization are all potential costs (Leonardi, 2018). Depending on the conditions of the individual employee, some aspects may constitute net advantages or expenses. Higher pay will help individuals who keep union positions, but they may limit employment prospects for others. Unions generally modify methods for selecting promotions and layoffs, usually emphasizing seniority, which benefits some employees while limiting those of others.
The demand and supply framework has been applied to evaluate data whereby each individual’s union status is monitored. They are fundamentally intangible. In traditional markets, one may rely on equilibrium assumptions where supply matches demand, which is represented by the experiential amount traded. According to such a premise, the experiential degree of unionization corresponds to real supply and demand. This premise, nevertheless, would be unworkable provided the higher level of governments control and the improperly competitive character of market unionization. The most popular characterization of the disequilibrium in the non-union segment (Osborne-Lampkin et al., 2018).
Employees’ openness to union representation, as well as employers’ reluctance, may be influenced by prevalent opinions about the role of collective bargaining and unions in the community. Osborne-Lampkin, (2018) discovered in their pioneering U.S. study that the measure of pro-union attitude, the proportion of Democrats in the House, had a considerable influence on United State union growth. Since societal opinions regarding unions have a tendency of getting mirrored in labor administration and its legislation.
Determinants of Unionization in the Economy
Legislation controlling employees’ collective bargaining rights, as well as the mechanism for enforcing as well as administering such rights, tend to have a significant impact on the supply of and demand for union representation. Nevertheless, it should be acknowledged that labor relations administration and its law reflect some fundamental variables, like community’s sentiments towards a union; whilst there is no adequate assessments of societal attitude, determining the independent influence of the legal regime will be difficult. Furthermore, union expansion and a favorable legal climate for union growth may be combined reflections of underlying cultural sentiments. The legislation may not have an independent impact if favorable sentiments do not exist (Schnabel, 2020).
Various economic and social policies may also have an impact on the level of unionization, albeit the way of the influence is equivocal. Work regulations like those governing least salaries, severance compensation, notice of layoff, workplace health and safety, statutory holidays and overtime premiums may reduce the need for unionization by narrowing the salary and working conditions disparity between organized and unorganized workers. similar rules might have assisted union growth by limiting competition from lower labor costs which could have otherwise prevailed in the nonunion sectors if such benefits had not been extended to unorganized employees (Strunk et al., 2018).
The demand-supply framework can be used to analyze these findings. Certain action will become less successful to the bigger the crew, as well as the necessity for formal grievance procedures, communications, and work standards is stronger in bigger companies, therefore the need for union representation tends to be stronger in larger institutions. Furthermore, the per-employee cost of unionization is smaller at bigger enterprises. Sectors with critical employment tend to have a stronger demand for a collective voice to advocate employees’ interest in internal workplace safety and health regulation (Traxler, 2018).
Several impacts may be connected with capital intensity. As with occupational risks, capital-intensive manufacturing processes may necessitate a stronger collective voice in terms of work structure and flow—aspects such as assembly line speed, shift scheduling, and overtime rules. Furthermore, high capital intensity suggests that labor expenses are a minor component of overall expenditures. As a result, labor demand becomes more inelastic, increasing the potential pay benefits from unionization.
The economic study of households and businesses starts with the premise that the decision maker optimizes objective functions while being constrained by the economic setting. Private enterprises are often expected to exploit profits subjected to production function, product market demand circumstances, and input market supply factors. It is a hypothesis having testable inferences that has been determined to be consistent with the data. The households are expected to maximize utility, which is determined by products prices and pay rates. It is the theory that underpins product market demand for services and goods, as well as the theory of labor supply addressed in Chapter 2.
These findings imply that union officials may be able to think independently, such as increasing dues money, extending the organization’s power and membership, and increasing their income. Such a desire to keep their positions prevents executives from veering farther from the preferences of the affiliation. The degree to which these limits are binding may vary depending on the circumstances of the individual. According to Waddington et al., (2019), differentiating between union leaders and union members, as well as recognizing leaders’ political interests, might assist explain why strikes sometimes occur during contract talks. A theory of union preferences based purely on members’ requests may be unable to account for all elements of union behavior. It might be a decent approximation of observed behavior.
Behavioral Implications of Unionization and Collective Bargaining
Changes in union membership may cause changes in union priorities. For instance, suppose employment in the business or industry grows significantly, not only will membership grow, but so will the median member’s age and seniority. If the union represents the choices of its members, the union’s aims will change to reflect the desires of younger, less senior workers. In fading industries, the reverse is likely to occur. It affects the amount of future union preferences and membership in the formulation of pay policy. Future membership will be diminished if the union adopts a high-wage program, as businesses replace capital for consumers and labor replace cheap products. Union preference might not be constant over time, but they are affected by pay policies that are implemented.
Several unions work to achieve their members’ working conditions and pay directly by bargaining with the employers, and the possibility of a picket is their principal source of striking leverage. Craft unions and professional groups, on the other hand, can indirectly boost their members’ pay and working conditions by limiting labor supply. Labor supply constraints can be a significant source of union influence for these groups.
Most unions aim to actively improve their members’ pay and working conditions through bargaining with the employer. Professional groups and craft unions and, on the other hand, can indirectly boost salaries and improve working conditions by limiting labor supply. Limiting access via the certification, occupational licensing and apprenticeship system are all mechanisms for limiting labor supply.
References
Fay, D. L., & Ghadimi, A. (2020). Collective Bargaining during Times of Crisis: Recommendations from the COVID?19 Pandemic. Public Administration Review, 80(5), 815-819.
Gahan, P., Pekarek, A., & Nicholson, D. (2018). Unions and collective bargaining in Australia in 2017. Journal of Industrial Relations, 60(3), 337-357.
Garnero, A. (2021). The impact of collective bargaining on employment and wage inequality: Evidence from a new taxonomy of bargaining systems. European Journal of Industrial Relations, 27(2), 185-202.
Hemphill, A. A., & Marianno, B. D. (2021). Teachers’ unions, collective bargaining, and the response to COVID-19. Education Finance and Policy, 16(1), 170-182.
Kjellberg, A. (2019). Sweden: collective bargaining under the industry norm. Collective bargaining in Europe: Towards an endgame, 1, 583-604.
Leonardi, S. (2018). Trade unions and collective bargaining in Italy during the crisis. Rough waters European trade unions in a time of crises, 83.
Osborne-Lampkin, L. T., Cohen-Vogel, L., Feng, L., & Wilson, J. J. (2018). Researching collective bargaining agreements: Building conceptual understanding in an era of declining union power. Educational Policy, 32(2), 152-188.
Schnabel, C. (2020). Union membership and collective bargaining: Trends and determinants (pp. 1-37). Springer International Publishing.
Strunk, K. O., Cowen, J. M., Goldhaber, D., Marianno, B. D., Kilbride, T., & Theobald, R. (2018). It is in the contract: How the policies set in teachers’ unions’ collective bargaining agreements vary across states and districts. Educational Policy, 32(2), 280-312.
Traxler, F. (2018). European Monetary Union and collective bargaining (pp. 85-111). Routledge.
Unions and Collective Bargaining: Chapter 14 from Labour Market Economics, Ninth Edition by Benjamin, Gunderson, Lemieux, Schirle, Riddell, 2021 431
Waddington, J., Müller, T., & Vandaele, K. (2019). Setting the scene: collective bargaining under neoliberalism. Collective bargaining in Europe: towards an endgame, 2.
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