WDW 244H1F 2003W

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WDW 244H1F 2003W

• LABOUR RELATIONS
• Professor Frank Reid
• Centre for Industrial Relations
• Lecture 1
• Introduction Competitive Labour Markets
• Course website http//individual.utoronto.ca/fran
  kreid

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Lecture Format

• Lecture times
• - UofT time zone, lectures start at 10 minutes
  past the hour and finish on the hour.
• - i.e. lecture starts at 610pm, breaks at
  700pm
• - resumes at 710pm, ends at 800pm.
• - timing of 10 minute break may vary to suit
  material
• Questions
• - Questions welcome during class or after class.
• - No questions during the 10 minute break,
  please.

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WDW 244H1F 2003W

• LABOUR RELATIONS
• PART 1 INTRODUCTION TO INDUSTRIAL RELATIONS
• Studying IR at UofT
• The IR systems model
• -ref GPT chapter 1

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Whats IR, ER, HR LR?
Industrial Relations/ Employment Relations Study
of all aspects of the employment relationship.
Human Resources Study of relations
between Employees Management.
Labour Relations Study of relations
between Labour Management.
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Programs in IR/HR at UofT

• UNDERGRADUATE PROGRAMS
• BA in Employment Relations
• Major program 7 full course equivalents
• Specialist program 10 full course equivalents
• administered by Woodsworth College, St. George
  campus
• www.wdw.utoronto.ca
• www.wdw.utoronto.ca
• BA in Industrial Relations
• Major program 6.5 full course equivalents
• administered by University of Toronto at
  Mississauga (UTM), ECO Dept
• www.erin.utoronto.ca/academic/eco

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Programs in IR/HR at UofT

• GRADUATE PROGRAMS
• Post-Graduate Certificate in HRM
• 5 full course equivalents from ER program
• administered by Woodsworth College
• Master of Industrial Relations (MIR)
  PhD in Industrial Relations
• MIR requires a minimum of 8 months with
  appropriate undergrad preparation (e.g. BA in ER
  from UofT) and a maximum of 2 academic sessions
  (16 months)
• administered by Centre for Industrial Relations
• www.chass.utoronto.ca/cir

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Why Study Labour Relations?

• One-third of the working population in Canada
  works in unionized environment.
• Over 70 of the public sector belongs to unions.
• Chances are you will quite likely be working in
  or dealing with people working in unionized
  workplaces.
• It pays to know how it works either as an
  employee or as a member of the management team.

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The Systems Framework

• Outcomes
• Union Recognition and Security
• Collective Agreement
• Due Process
• Strikes / Lockout

Environments Economic Political Legal Social

• Interaction
• Mechanisms
• Certification
• Bargaining
• Mediation / Arbitration

Govt
Goals Values Power History
Mgmt
Union
Feedback loop to Internal / External Inputs
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WDW 244H1F 2003W

• LABOUR RELATIONS
• PART 1 THE IR ENVIRONMENT
• The Economic Environment
• ref GPT chapter 6
• The Legal Environment
• ref GPT chapter 8

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The Economic Environment

• Competitive Labour Market
• Refers to basic supply and demand model.
• Many (perhaps most) labour markets are not
  competitive.
• But competitive model is benchmark for
  comparisons.
• Provides starting point for more advanced models
• Ideological importance.
• Assumptions of the Competitive Model
• Large number of employers.
• Employers are wage takers.
• No artificial barriers to entering occupation.

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Supply of Labour

• Number of people who want to work in any given
  occupation depends on
• Wage rate in the occupation (total compensation)
• Working conditions
• Amount of training required
• Preferences of employees
• Greater the wage rate, the more people will want
  to work in the occupation, other things equal.
• i.e. the labour supply curve is upward sloping.

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The Labour Supply Curve

• As the wage rate increases, more employees want
  to work in the occupation.

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Demand for Labour

• Number of workers an employer wants to hire in
  any occupation depends on several factors
  including
• Wage rate
• Technology
• Output of the organization (sales)
• An increase in the wage rate will reduce the
  amount of labour an employer wants to hire, other
  things equal.
• i.e. the demand for labour is downward sloping.

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The Labour Demand Curve

• As the wage rate increases, quantity of labour
  demanded decreases.

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The Equilibrium Wage Rate

• The equilibrium wage rate is the wage at which
  the supply of labour equals the demand for
  labour.
• No deficient demand unemployment at equilibrium
  wage but
• Frictional unemployment due to turnover.
• Structural unemployment due to mismatch.
• Pressure toward equilibrium wage in a competitive
  market.

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Equilibrium wage in SD model

• Equilibrium occurs at the intersection of the
  supply and demand curves.

• Oversupply of labour at W1.

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Compensating wage differential

• Application Compensating Wage Differentials
  (CWD)
• Equalize net advantage of occupations in long
  run.
• i.e. wage difference to offset the undesirable
  working conditions in each occupation (for the
  marginal employee).
• Wage premium attracts employees to undesirable
  occupations.
• Provides incentive for employers to eliminate
  undesirable aspects of job, provided that cost of
  elimination is lower than the CWD.

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Economic Efficiency

• Economic efficiency means making some people
  better off and no one worse off.
• Example Using shift differentials instead of
  assigning workers to shifts increases efficiency.
• In general, one lesson of competitive markets is
  that it is more efficient to use the price
  mechanism to allocate resources than
  administrative direction.

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Application Shift Premiums

• Assume initially equal number of employees
  working rotating day and night shift (with no
  shift differential).
• Proposition Some employees can be made better
  off and no one worse off with an appropriate
  shift differential and allowing all employees to
  voluntarily choose their shift (including
  continuing to rotate).

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Application Shift Premiums

• Assume shift differential is created by
  increasing night wage and lowering day wage by an
  equal amount (cost neutral to the employers).
• Increase shift differential until equal numbers
  of employees select day and night shifts.

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Application Shift Premiums

• Employees who choose steady day shifts are better
  off because they must value steady day shifts
  more than reduction in income.
• Employees who choose steady night shifts are
  better off because they must value extra income
  more than need to work steady day shifts.
• No employee is worse off as they have the option
  of rotating shifts and their income shift
  pattern remain unchanged.

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Use of shift premiums as CWD

• IR barriers to implementing shift premiums as
  compensating differentials
• Administrative costs
• Unions often resist wage differences
• Vignette at beginning of Chap 6 (GPT) gives an
  example CAW and management at GM truck plant in
  Oshawa using compensating differentials to induce
  employees to voluntarily work a steady night
  shift