Title: COLLECTIVE BARGAINING, EMPLOYMENT PROTECTION/ CREATION AND COMPETITIVENESS IN THE UNITED STATES: THE IMPACT OF A POLICY OF INDIFFERENCE AN THE ABSENCE OF STRUCTURES
1 COLLECTIVE BARGAINING, EMPLOYMENT PROTECTION/
CREATION AND COMPETITIVENESS IN THE UNITED
STATES THE IMPACT OF A POLICY OF INDIFFERENCE AN
THE ABSENCE OF STRUCTURES
- Presented by
- Richard N. Block
- School of Labor and Industrial Relations
- Michigan State University
- Funded by the International Labor Organization
2Co-Authors
- Peter Berg
- Michael Moore
- Mike Polzin
- Dale Belman?
3How Does the Collective Bargaining System in the
United States Address Competitiveness and
Employment Protection?
- No formal structures in the United States that
focus on these issues - Little governmental involvement in substance of
collective bargaining in U.S. - Is the formal, written, fixed duration collective
agreement the best vehicle for determining how CB
addresses competitiveness and employment
protection/creation?
4Importance of the Employer
- Employer is now key actor in the IR system
- past 20 years
5Context
- Legal
- Institutional
- Joint and Governmental
- Economic
6Legal Context
- Most Important
- accessible
- public
- coverage
- coercive
- Establishes basic structure
- who must negotiate and for whom
- meaning of negotiate
- about what must parties negotiate?
- what happens if parties cant agree
7Basic Legal Principles
- No presumption that CB normal
- default is employer determination
- Legal bargaining (election) units
- representation rights limited to these units
- Bargaining is unit-by-unit, workplace-by-workplace
- multi-unit bargaining only by continuing consent
of all parties involved - Minimal government involvement in process or
outcomes
8Implications for Competitiveness and Employment
Security/Creation
- Employers often have competitiveness options away
from union - multiple-union firms
- no obligation to agree to employment security or
matters that will link employee welfare and
competitiveness - no system for encouraging cooperation unless both
parties agree - systems protects right of either party not to
agree on TCE
9Obligation to Bargain
- meet at reasonable times
- no obligation to agree
- limited to terms and conditions of employment
(TCE) - not all er decisions that that affect employment
a TCE - changes in capital structure or product mix of
firm for the purpose of increasing firm
competitiveness generally not considered to be
TCE - basic changes in nature of business not TCE
10BASIC POINTS
- Law indifferent to use of CB system for
competitiveness and job creation/protection - enables CB system to be so used if both parties
wish it - enables CB system to not be so used if one party
does not wish it - Treats these matters no differently than any
other subject of bargaining
11BASIC POINTS (CONT.)
- The focus of the law is not on problem-solving
or on linking the issues of competitiveness and
job security. - The focus of the law is on the individual
employer decision and whether or not the employer
has the right to make that decision without
negotiating with the union about the decision.
12Institutional Context
- Employer Institutions
- No overarching er structures that encourage CB as
a vehicle for competitiveness and job protection
creation - Employers are competitive firms first and
employers second - Employer Institutions tend to be lobbying or
partisan research and education organizations
13Institutional Context
- Union Institutions
- mixed
- IU can encourage or force locals to do something,
but locals must implement - locals fundamentally autonomous
- competition among locals
14Joint and Governmental Structures/Context
- Not many
- Collective Bargaining Forum
- a group of union and employer executives under
auspices of USDOL - In April, 1999, issued a report entitled
Principles for New Employment Relationships
15Principles of New Employment Relationships
(1999)
- (a)cceptance . . . by union leaders and members
of their responsibility to work with management
to improve the economic performance of their
enterprises in ways that serve the interests of
workers, consumers, shareholders, and society
- (a)cceptance by corporations of employment
security, the continuity of employment for its
workforce, as a major policy objective that will
figure as importantly in the planning process as
product development, marketing, and capital
requirements
16Principles . . .
- National Association of Manufacturers refused to
sign - Indicates decentralization on employer side
17Economic Context
- Laissez Faire with respect to employment and
competitiveness - Full employment not even discussed as a policy
issue - Monetary policy - minimize inflation
- job security - wage increase link?
- Fiscal Policy - none
- Trade Policy - open markets, with exceptions
- REINFORCES TENDENCY TOWARD VARIATION
18Incidence CB and Competitiveness
- Voos-Eaton, 1992
- up to 79 had participatory programs
- app. 40 had profit sharing
- Industry analyses
- high incidence steel (National Steel), auto
assembly, aerospace, telecommunications, paper
(forced) - low incidence auto parts, meatpacking, trucking,
textiles - Gray, Gray, Myers, 1999 - 14.8 of agreements
19Incidence CB and Employment Protection/Creation
- IRRA Studies
- very little
- GGM
- 1-3 of agreements
- Well developed systems in auto assembly and
National Steel - In general, employment security in the U.S. is
market-based rather than administered
20Empirical Results on Impact
- CB and Organizational Performance
- no evidence that CB, per se, reduces
productivity actually can enhance it - gains do not necessarily go to shareholders in
unionized firms - profits and rates of return generally lower in
unionized than nonunion firms - supercompetitive profits in nonunion firms or
undercompetitive in unionized firms?
21Empirical Results on Impact (cont.)
- CB and Competitiveness
- capability of firm to maintain a reasonable
market share through selling its product or
service at a competitive price - special efforts by labor and management to
address issues of competitiveness may improve
product quality and productivity, but their
effects may not be large. Rarely is labor
relations the bases or one of the major bases, on
which the firm maintains its position in the
product . Labor relations a contributor, but not
a major determinant of competitiveness.
22Four Case Studies
- GM-Lansing, Michigan and UAW
- Alcoa-Rockdale, Texas and Steelworkers
- Lear-Elsie, Michigan and UAW
- Sparrow Hospital (Lansing, Michigan) and Michigan
Nurses Association
23GM-Lansing and UAW
1999 Oldsmobile Alero
24GM-Lansing and UAW(continued)
- Four Divisions
- Worldwide Facilities
- Sheet Metal
- Powertrain
- Assembly (small car)
- about 8600 hourly and 2500 salary
- History
- Hometown for Oldsmobile from turn of century
25GM-Lansing and UAW Local 652 Competitive
Environment
- Declining Market Share
- Corporate Reorganization
- nameplates became marketing divisions only
- Lansing must now compete for work
- Nature of Product
- small cars, losing money
- Nature of Production Process in Lansing
- trucking bodies
26GM-Lansing and UAW Local 652 Noncontractual
System
- Pervasive Jointness
- star system
- Unitary labor relations in a multidivisional
system consistency - Movement across all four divisions provides job
security when a redundancy in one division - affiliated corporations
27GM-Lansing and UAW Local 652 Noncontractual
System
- Examples
- small car profit
- signs in Sheet Metal
- camshaft line in Powertrain
- no contractual prohibition on subcontracting, but
an informal prohibitions
28Alcoa-Rockdale, Texas and United Steelworkers
Local 4895
- Aluminum(Aluminium) extracted from other
substances via process of smelting - Bauxite
- Alumina from bauxite
- Alumina decomposed into aluminum and oxygen via
an electrolytic process - Aluminum then cast into ingots (large bars) or
hogs (small bars) suitable for melting or
casting
29Alcoa-Rockdale, Texas and United Steelworkers
Local 4895
- smelter
- produces aluminum and aluminum powder
- major customer is an Alcoa flat-rolled plant in
Iowa - other customers are ordinance, rocket fuels,
lithographic, paint, and personal care industries
30Collective Bargaining
- History
- Generally harmonious consistent with Alcoa
corporate philosophy - one national strike in 1986
- resulted in reduced job classifications
- Basic characteristics
- trust
- information sharing
31Competitive Threats
- Market pressure on price of aluminum due to
increases in supply - volatility from 1/lb. to .58/lb. in two years
- Information Flows
- London Metal Exchange
- Environmental Regulations
- emissions
- strip mining
- Expense of coal vis-Ă -vis hydro
32Collective Bargaining and Competition
- Plant must make money at .50/lb.
- Contract Changes
- reduction in rate of increase in base wages
- increase length of contract
- reduce number of job classifications
33Collective Bargaining and Competition
- Noncontractual Changes
- Partnership Team on directive from corporate and
Int. Union - plant manager
- LR staff
- department heads
- bargaining committee
- Examples
- recycle scrap metal
- yard work
- janitorial work
34Conclusions on Alcoa-Rockdale
- Mature Relationship
- Trust
- Partnership Teams
- Simultaneous Focus on
- Competitiveness
- Job Protection
35Lear and UAW 1660
- Description
- automotive components - seat systems
- about 500 ees in plant
- Ownership changes
- private from 1966-73
- ITT in 1973
- Lear in 1997
36Employment Issues
- Variation in employment
- 1991 - 305
- 1995 - 900
- 1996 - 290
- Associated with specific work brought in and out
37Competitiveness Issues
- Major competitors
- Bertrand Pfaume
- Johnson Controls
- Mariner
- Several left market since 1990
- Customers
- GM, Ford, DaimlerChrysler, Saturn, Toyota
38Change in Ownership/Corporate Strategy Issues
- ITT
- Corporate Strategy - maximize short-run rate of
return - Lear
- Corporate Strategy - maximize market share in
automotive interior components market
39Production Process
- Production Teams/Cells for each customer
- Employees can see a customer come and go by
examining the plant - no cell, no employment a cell, employment
40Noncontractual CB Responses for Competitiveness
- Planning Team
- high level union and manage
- Joint Steering Team
- Union and Management reps
- Design and development teams
41Job Security
- Not administered
- Directly linked to competitiveness
42Conclusions on Lear-Elsie
- Importance of Corporate Strategy
- Visibility of Customers
- Focus on Competitiveness
- Job Security a Derivative of Competitiveness
43Sparrow Health Systems (Hospital) and Michigan
Nurses Association
- Largest health care system in Lansing, Michigan
area - about 5600 employees
- 1600 members of PECSH
44Competitive Environment
- Competition from non-hospital health care
providers - 3rd party payers - insurance companies
- Strong competitors through consolidation
45Mutual Gains Committee
- Patient Focused Care Implementation
- Hiring
- Awards for ees in short staffed areas
46Overall Conclusions
- No system in place that focuses on CB,
competitiveness, and job protection/creation - left to legalities and the parties
- Competitiveness fairly common issue in CB
- Much of this outside formal agreement structure
- Administered Job Protection rare
- job security is market-based, on competitiveness,
rather than administered