In today’s world, labor unions have become popular in all sectors of the economy. The unionization process begins when a selected group of representatives obtains the authorization permits for a particular group of employees. This allows it to play the role of an intermediary between management and the workforce (Budd & Richard, 2013).
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Although I have never subscribed membership to any labor union, I understand their role in facilitating collective bargaining for the members. The demands may range from better working conditions, better pay, and so on. Even though unions are the major forces behind the enactment of labor laws that protect the interests of workers, many issues have cropped up due to their existence.
In my view, there is a need to cross-examine these laws with reference to the possible impacts on the economy, society, businesses, or even to the workers themselves. This analysis will provide a rationale on which the government should base its policy formulation specifically on the labor relations.
Considering the readings and class experiences that I have had so far, many economists evidently seem to concur on the effects of labor unions to the economy. Economically, unionization encourages the raising of wages above the competitive levels.
As a result, firms in a particular industry incur high production costs. Businesses react by lowering the output level which eventually reduces the gross domestic product of a country (Watcher & Cynthia, 2012). The existence of many unions in the public sector often exposes the government to the risk of high wage bill.
To get the revenue required to cover the huge wage bill, the government may resort to levying high taxes on the income of the people and on the essential commodities. When this happens, the cost of living becomes so much that may be unbearable to the citizens. The situation worsens when unionized companies pass the extra cost of labor as higher prices to the consumer.
Either in the private or public sector, unionization makes a country less competitive in the global market. When a country uses less financial resources in producing a certain good or service, it gains a competitive advantage over its global competitors. This can lead to rapid expansion of the industry thereby increasing the economic growth rate.
For instance, Michelin is the world’s leading producer of tires. It has one of its mega plants in the USA and the other in China. However, the cost of labor in the U.S.A is so high compared to China. As a result, China gets more revenue due to its massive production while America manages to generate less revenue because of the restricted production.
In fear of the possible effects of the unions, many companies are forced to pay their employees higher wages without considering of the prevailing economic conditions. In addition, the productivity of a worker declines with time after joining a union. This can be attributed to the development of a work reluctance attitude in most unionized employees. This is so because the workers are assured protection by the union.
Normally, the union contracts bar management from replacing the less efficient workers. For example, in the education sector, incompetent professors and teachers are always kept on the job for a long time thus minimizing the chances of getting a motivated teaching labor force. This explains why some countries have fallen far much below the world’s academic achievement rankings (Watcher & Cynthia, 2012).
In its negative impacts to the society, unionization has led to the unprecedented job losses as employers find it difficult control a unionized workforce. Moreover, many employers have stopped hiring due to the costs incurred in maintaining and laying off a unionized worker. Therefore, the formation of unions in a society discourages employment (Budd & Richard, 2013).
Additionally, unionization has encouraged corruption in the society. People bribe their way into power and retain particular posts. Since unions have the numbers, they are also used by politicians to fulfill their political ambitions. The idea of unions constituting a large voting bloc makes union officials to diverge from helping their members to supporting their favorite politicians.
Despite the fact that unionization affects people negatively on the economy, it is beneficial to the employees. Unions protect workers from rogue employers by ensuring there is safe working environment, reasonable hours of work, better pay, and so on. The power of collective bargaining makes it impossible for employers to replace employees who are deemed to be stubborn.
This happens especially to those fighting for their fundamental rights. Additionally, unions allow employees and management to deliberate on certain issues before signing the binding contracts. This kind of accomplishment may be impractical when it is done on worker-by-worker basis. Also, unionization guarantees job security to the workers thus able to plan for their future with ease (Smith, 2001).
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From the foregoing discussion, I can deduce that although unionization is an ideal process of ensuring that the rights and welfare of the employees are observed and protected respectively, there is need to consider not only the components, but also the economy itself.
Considering the arguments given above, I can conclude that unionization is not good for an organization or a country and, therefore, should be discouraged using the best ways possible.
Budd, J., & Richard, D. (2013). Labor relations: Striking a balance. New York, U.S.A: Mc Graw-Hill Publishers.
Smith, P. (2001). Unionization and union leadership: The road haulage industry. New York, U.S.A: Continuum.
Watcher, M., & Cynthia, E. (2012). Research handbook on the economics of labor and employment law. Cheltenham, UK: Edward Elgar Publishing Limited.