Collective Bargaining

Posted: October 17th, 2013

Collective Bargaining

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Collective Bargaining

Under normal scenario, the existence of more elastic demand of labor provides the employees with a solid ground for the unions to negotiate higher wages in isolation from the market forces. Increased wages for unionized workers ends up in fewer employment opportunities especially for the lowly skilled employees. However when older workers are concerned, an elastic demand of labor on their part may not necessarily form the basis of demanding increase on wages. This is mainly because their area of focus is not primarily the increased wages rather than the retirement benefits realized at the end of tenure. According to actuaries’ reports, salary increases usually negatively influence the retirement benefits rendering the latter to be right-sized to match the underlying economic reality (Chamberlain, & Kuhn, 2008).

Demanding for higher wages may result in the company reducing the current multiplier for future service. If the income therefore fails to decrease or increase, the multiplier changes appropriately and the older worker may end up having less retirement benefits available upon retirement. This aspect has been effectively executed as it tends to undercut the underlying idea that the existing pension multiplier is permanent and only ratchets upwards. However, many employers refrain from using this technique in many occasions since multiple earning rates are complex and carry underlying difficulties in their communication (Beal, Wickersham, & Kienast, 2006).

Though demand may be elastic at the time, it is therefore more prudent for the older workers to exercise caution and keep focused on the pension multiplier as opposed to increase in wages. Incremental strategies are usually executed in stages where changes are achieved gradually. This in the end may also not be beneficial to the older employees since they may not be under employment when the full changes are realized (Douglas, Brian, and Moira, 2006).

References

Douglas G., Brian, W., and Moira K. (2006). Canadian Labor and Employment Law for the US Practitioner. 2^nd. Washington: BNA Books.

Chamberlain, N. W., & Kuhn, J. W. (2005). Collective bargaining. New York: McGraw-Hill.

Beal, E. F., Wickersham, E. D., & Kienast, P. (2006). The practice of collective bargaining. Homewood, Ill: R.D. Irwin.