Determining who has greater power in an industrial dispute is a complex question with no easy answer. The balance of power can shift between the two sides involved.
What influence the level of power in industrial dispute?
The level of power in an industrial dispute between employees (trade unions) and the employer depends on a number of factors:
- Relative strength of trade unions and employers. The final outcome of the collective bargaining process depends on the negotiation strengths of the employer and employee representatives.
- Level of experience and skills of management. This boils down to skills and techniques used by the firm’s management team in dealing with employees. And, how well the business negotiators are prepared and organized in handling a trade union.
- Membership and unity. This refers to the number of members in a trade union and the degree of unity within that union. More powerful trade unions will have united members with majority of the workforce belonging to the union.
- State of the economy. This mainly includes economic factors and political climate. Employees will be in a weaker position to negotiate payment increases, if there is high unemployment and will be in a stronger position when unemployment is low.
- Demand for labor comes from demand for products that labor supplies. When demand prospects for a good or service are strong and favorable, then the demand for labor will be justified and sustainable strengthening the bargaining power of employee representatives.
- Degree of substitution between labor and capital. The business might decide to replace its workers using capital intensive production methods making employees redundant when trade unions push for higher benefits. This will increase the costs of production, therefore making the business less competitive.
- Public and media opinion. The society might either support or the business or trade union in an industrial dispute. The influence of the general society might have a strong impact on determining which party has more negotiating powers.
- Government involvement. Any government legislation – rules and regulations – regarding industrial disputes may determine the parameters within which negotiations take place.
SITUATION 1: Employees (trade unions) have more power
The power of employees (trade unions) will be strong under the following conditions:
- Most workers in a business belong to one trade union.
- All workers agree to take the industrial action decided upon.
- The business is operating at full capacity and does not want to disappoint customers.
- Industrial action will cost the employer large amounts of lost output leading to losses in sales revenue and profits.
- There is strong public support for the trade union’s case.
- Inflation is high, so a high wage increase is justifiable to maintain living standards.
- Labor costs are a low proportion of Total Costs (TC) giving lots of room for negotiations.
SITUATION 2: Employer has more power
The power of an employer will be strong under the following conditions:
- Unemployment is high, so there are only few alternative jobs for workers to take.
- Action taken by employer will have a very quick impact on workers’ wages.
- There is strong public support for the employer’s case.
- Threats of relocating the business to low-cost countries are taken seriously by the workers.
In short, there is not a simple answer as power dynamics can shift throughout the dispute, and both sides employ a range of tactics to leverage their strengths.
