Labor and union studies

Labor Relations Case Studies

The effectiveness and proficiency of labor unions in dealing with the practical issues that arise in the workplace has been a matter if great debate since these organizations were first founded, and the question is still unresolved. Though there can be little dount that labor unions have given more power to employees through the practice of collective bargaining, they are also necessarily highly bureaucratic organizations, responding to change with deliberately and purposefully slow agreement. In addition, and in part due to the slow nature of their actions, unions and the employees they represent can evince a certain shortsightedness in determining what is truly best for the labor force in both their recommendations and their actions. Cost saving measures proposed by management representatives are generally met with resistance by unions and the general labor force, as they almost always (by definition) lead to a reduction in pay and/or other benefits enjoyed by labor. Yet without certain cost saving measures at certain times, labor could quite realistically find themselves without a company to work for.

One of the more contentious issues that falls into these lines surprisingly neatly -- at least in the United States, where there is no national plan -- is healthcare. Providing healthcare has become standard for large employers, and presents one of the most necessary benefits to employees (given the high cost of private, individual insurance), but is also one of the highest costs to management. When a company (or the entire economy) is facing a financial downturn, healthcare is often one of the first things management will turn to in an effort to reduce costs and keep the company afloat. Though labor often balks at the reduced coverage/higher personal costs of any such changes, it also helps to ensure that they will have a job in the future, highlighting one of the basic inefficiencies of the current labor relations system.

In case study 7.2, management decided to change insurance carriers when the company's current provider announced a significant increase in cost and a large sum of up-front payment as an assurance against the company's ongoing financial struggles. The only significant change in coverage, according to the case study, was a reduction in prescription benefits. The specifics of coverage are not detailed in management's contract with the union; all that is technically provided for is "basic medical benefits covering reasonable and customary charges." Given te financial straits that the company was in, and the extreme flexibility of the contract, the cost savings presented by management's decision to change insurance providers made the decision very reasonable, ensuring continued coverage without losing employees.

In this light, it seems unreasonable for the union and employees to reject the new medical plan solely on the grounds of the reduced prescription coverage. Though their cost for prescriptions would be higher than the flat four-dollar rate, after reaching their deductible amount the new plan would still cover 80% of prescription costs. For most employees, it can safely be assumed that prescription costs would not become prohibitive under the new plan, especially with the availability of cheap generic prescriptions. Regardless of the actual rise in costs to the employees, however, there is nothing in the contract between labor and management that prohibits this change on management's part, and given the financial circumstances of the company labor ought to be willing to make this slight concession in order to ensure job security.

This issue raises a very important question regarding the actual role of the union. The primary purpose of a labor union is to represent their employees. At the same time, the union must ensure that mutually beneficial agreements can be reached between he labor force and management. This can require the union not only to negotiate with management, but alsa (in certain specific instances) to negotiate with the employees in order to develop an effective strategy for continued employment and benefits. This should in no way be construed to mean that the union's task is to continually convince employees o agree with management's preferred business strategy, but in certain situations -- such as the case at hand -- convincing employees to accept the management's decided course of action is better for the company and the employees at large in the long-term. The union is not merely representative of its employees current views, that is, but must represent their long-term interests, sometimes in spite of themselves.

As stated above, the management in this instance had absolutely every right o make the change in medical insurance providers, so long as all basic "reasonable" medical expenses are covered. Prescription coverage is one of the most difficult features of medical coverage to find in the private market, and is also one of the most expensive. The deductible and percentage coverage of the new medical plan described in the case study is certainly reasonable for the employees, and the savings to the company will allow their continued operation. If the company fails, the employees will not be receiving any medical coverage through the company; not only does management have the right to make this change, but it is one of the most cost effective and reasonable steps they can take to ensure the continued employment -- and medical coverage -- of their labor force. Ultimately, the issues comes down to one of contractual obligations, and given the vagueness in the contract concerning medical coverage there is nothing to prevent management form making this change.

Another major component of the current labor relations system is the time period it can take to resolve certain disputes, and the uncertainties involved in many cases. This is especially true with the rules and even laws regarding an employee's or union's ability to go on strike while retaining a promise of employment. Ultimately, work is the only thing that labor can withhold from management as a bargaining chip. Whether via slowdowns or full-out strikes, withholding work is the only real power that labor has, which is why union contracts and federal laws protect such withholding as a way of protecting labor's interests. There are also rules and laws protecting management from unfair strikes and demands, as well as provisions for the continued operation of their business during a strike. Though protection in strike situations is absolutely necessary for both management and labor, it also creates many further inefficiencies in the current labor relations system, as case study 9.3 clearly shows.

The first and most obvious issue in the case study is whether the two building porters, who were striking for unfair labor practices unspecified in the case study, were legally protected from termination during their strike. Because the details of their strike are not included in the case study, it is impossible to provide a personal opinion regarding the validity of the employees' strike under unfair labor practice provisions. However, given that the NLRB eventually ruled in favor of the two employees and determined that their strike was indeed justifiable and therefore included protection from termination, it must be concluded that their strike did indeed take place due to unfair labor practices. As the final arbiter in such matters, the NLRB's decision makes the strike by definition a legal and protected act of the employees.