Collective Bargaining

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Meaning

– Collective bargaining is the principle method whereby employers and employees establish and continue a relationship

– This is an important means of communication where– Allows the two sides to get together and talk about

problems, needs, goals and to settle differences

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Meaning

– It is subjected to external influences such as economic and socio-political change, technological and demographic change

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Definition

“ A method of determining the terms and conditions of employment and regulating the employment relationship between representatives of management and employees with the intention to reach an agreement which may be applied to a group of workers”.

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Collective Bargaining

The role of conflict in bargaining:– Bargaining would not occur if there was no conflict– Parties have different needs, goals, interests,

attitudes, values and perceptions– These goals are pursued at the costs of the other

party– If parties have sufficient power then they use

collective bargaining as a way forward

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Sources of conflict

– Scarcity of resources: availability of money– Incompatibility of goals, needs and interests– Different attitudes to work– Ambiguity in responsibilities and roles– Poor organisational structure– Poor communication

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Sources of conflict

– Most important over: wages and salaries– Management has to see to shareholder profits and

workers want more money– Productivity needs may force the firm to operate

flexible work practices and the unions might resist this

– Companies might want to dismiss inefficient workers and the union would resist this, demanding job security

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Sources of conflict

– Employees might demand shorter working hours, longer vacation leave and more time off for training

– Employees might insist on stricter health and safety controls which would be expensive for the company

– Employers demand loyalty to the firm whereas employees see it as the individual right to change jobs when the opportunity arises

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Features

It is a collective process Establishes regular and and stable relationship

between the parties involved It is a flexible and dynamic process It is a method of partnership of workers in management It is a give and take approach It is an attempt in achieving and maintaining discipline

in industry

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Subject matter of Collective Bargaining

– The subject matter of CB is very wide Rights and responsibilities of the

management and of the trade union Wages , bonus , production

norms ,leave retirement benefits and terms and conditions of service

Grievance redressal procedure Methods and machinery for the

settlement of possible future disputes Termination clause

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Bargaining Power

Power regulated the bargaining process:– If one party has more power it will override the

interest of the other party– Historically management has had more power – Its only in the 1980s onwards that this power has

been challenged by unions

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Bargaining power

Power:– Management's sources of power is their ownership

and/or control over the firm– Workers power comes from their ability to withhold

labour collectively - strikes– On an individual level workers hold very little power

and its only in trade unions that they have power

Collective Bargaining ProcessPreparing for negotiations

Administration of the agreement

Overcoming Breakdowns

Bargaining issues

Negotiating

Reaching the agreement

Ratifying the agreement

Negotiation

breakdowns yes

No

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Collective Bargaining Process

Preparing for negotiations– From the management side

Specific proposals for change General size of the economic package that the company

propose to offer Statistical displays and supportive data for negotiations Compilation of issues that will be be discussed

– From the union side Collect information on the financial position of the company Attitude from the management towards various issues

particularly the past negotiations Attitudes and desires of employees

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Collective Bargaining Process

Bargaining issues– Wage related issues– Supplementary economic benefits –

Pension plans paid holidays ,health insurance plans retrenchment pay etc

– Institutional issues rights and duties of employers and employees,QWL

Programmes – Administrative issues

Employee discipline ,discharge procedures ,work rules ,training and the like

Negotiating – Each side presents its initial demands – Success of the negotiation depends on the skills and ability of

the negotiators

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Collective Bargaining Process

Reaching the agreement Ratifying the agreement

– The outcome of a collective bargaining process is an agreement

– The agreement is put to the union members for vote and and if voted is formalised into a contract

– Agreement can stipulate a time factor to the agreement, for e.g. wage increase for one year only or for a number of years

Administration of the agreement

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Bargaining styles

Distributive or Conjunctive bargaining

Integrative or cooperative bargaining

Productivity Bargaining Composite Bargaining

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Bargaining styles:

– Distributive bargaining: this is the most common type

– Management and unions are in opposing positions and gain for one is a loss for another

– Antagonism dominates the bargaining items– These would be around wages and conditions of

employment

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Bargaining styles:

In distributive bargaining power is used as part of the strategy and tactics on both side

Each party strives towards an outcome that is favourable to its own side

Both parties are thus assessing strengths and weaknesses on both sides

Both parties are looking to how much they can push the other party

Each party assesses its ability to withstand being pushed

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Bargaining styles:

Integrative Bargaining– This is when both parties want a successful

outcome and there is a genuine desire to solve a problem

– For Eg : Decisions taken when the the entire industry is in threat Like Global Recession

– In integrative bargaining items are seen as problems that need resolving

– Integrative bargaining strives for a win –win situation– Conflict is minimized

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Bargaining Styles

Productivity Bargaining – In this method, workers’ wages and benefits are linked

to productivity.– Initially, a standard productivity index is finalized

through negotiations.– This index is not fixed at an exceptionally high level.– Workers crossing the standard productivity norms will

get substantial benefits.– This method of bargaining helps in making the

workers realize the importance of raising productivity for organizational survival and growth.

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Bargaining Styles

Composite Bargaining– Workers tend to argue that productivity bargaining

increases their workload. As a result, workers tend to favour composite bargaining

– In this method, labour bargains for wages as usual. – In addition, they also bargain for such issues that, if

permitted Eg. Workers demand further equity in matters

relating to work norms, employment levels, manning standards, environmental hazards, sub-contracting clauses, etc.

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Bargaining Styles

– Through composite bargaining, unions are able to prevent the dilution of their powers and ensure justice to workers by putting certain limits on the freedom of employers.

– For the employer, this is the lesser evil when compared to strikes and lockouts.

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CBA of Volkswgaen & I G Metall

Volkswagen and IG Metall agreed collective bargaining milestones for the six traditional plants during their negotiations

The central element is that the standard working time was increased from 33 to 34 hours a week without more pay.

A new, attractive profit sharing model for the workforce was developed.

Production volumes for each of the plants have been determined Safeguarding capacity utilization and thus jobs. The envisaged term of the agreement is January 1, 2007 until the

end of 2011.

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Emerging Issues in CB

Performance based Bargaining Women's issues Job security Productivity Quality of Work life

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The Milestones in Industrial Harmony : TISCO

1934: Profit sharing given for the first time in India. December 9, 1938: Labour Association registered in the name of

Tata Workers' Union. 1942: Tata Steel employees through representation of leaders of Tata

Workers' Union join Quit India movement. January 8, 1956: Comprehensive Agreement between Tata Steel and

the Tata Workers' Union broke new ground in collective bargaining and workers' participation in management.

1959: A new Agreement is signed between TWU and Tata Steel to implement a new wage structure.

Agreements continue to strengthen bonds of industrial harmony in 1965 ,1970,1975,1999,2001

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Reference

1. Industrial Relations ;Emerging Paradigms ;B D Singh

2. Human Resource Mangement ;K Aswathappa,fifth edition .