October 24, 2012

MU0012 [Employee Relations Management] Set1 Q5

Q5. List the advantages of collective bargaining.


Collective Bargaining Advantages
Collective bargaining is a process of bargaining in groups as opposed to individual bargaining. The bargaining could relate to many factors such as the payment of the employees, holiday, overtime, bonus, shift arrangements and so on. There are many benefits of collective bargaining. 

Some of them are the following:
• It facilitates settlement of any disputes without any conflict
• It ensures that there is peace between both the parties through dialogues
• It facilitates participation from both the parties. 
• It ensures mutual trust and understanding between both the trade union and the management of the organisation.
• It facilitates stabilised union membership in societies that have multiple unions.
• It ensures healthy industrial relations.
• It makes the employees feel more involved and wanted in the organisation
• It ensures that individual stress and employee insecurities are discussed
• It establishes the employee and the management rights in the organisation.
• It develops a sense of responsibility among the employees
• It ensures that the strength of workforce is increased. It in turn increases the overall bargaining capacity of the workforce
• It ensures that the morale and productivity of the employees is increased.
• Effective collective bargaining ensures that the trade unions movement is efficient
• It facilitates in securing a prompt and fair settlement of grievances. 
• It provides a flexible means for the adjustment of the wages and employment conditions 
• It facilitates the management to resolve issues at the bargaining level rather than taking up complaints of the individual workers.
• It ensures a sense of job security among the employees 
• It ensures that a channel of communication is open between the workers and the management. This further increases worker participation in decision making.
• It plays an essential role in settling and preventing industrial disputes
• It ensures that a harmonious industrial climate is established. This helps the pace of nation’s efforts towards economic and social development.
• It encompasses fluidity and ample scope for a compromise, for a mutual give-and-take before the final agreement is arrived at.

Collective bargaining is specifically an industrial relations mechanism or tool, and is an aspect of negotiation, applicapble to the employment relationship. As a process, the two are in essence the same, and the principles applicable to negotiations are relevant to collective bargaining as well. However, some differences need to be noted.

In collective bargaining the union always has a collective interest since the negotiations are for the benefit of several employees. Where collective bargaining is not for one employer but for several, collective interests become a feature for both parties to the bargaining process. In negotiations in non-employment situations, collective interests are less, or non-existent, except when states negotiate with each other. Further, in labour relations, negotiations involve the public interest such as where where negotiations are on wages which can impact on prices. This is implicitly recognized when a party or the parties seek the support of the public, especially where negotiations have failed and work disruptions follow. Governments intervene when necessary in collective bargaining because the negotiations are of interest to those beyond the parties themselves.

In collective bargaining certain essential conditions need to be satisfied, such as the existence of the freedom of association and a labour law system. Further, since the beneficiaries of collective bargaining are in daily contact with each other, negotiations take place in the background of a continuing relationship which ultimately motivates the parties to resolve the specific issues. The nature of the relationship between the parties in collective bargaining distinguishes the negotiations from normal commercial negotiations in which the buyer may be in a stronger position as he could take his business elsewhere. In the employment relationship the employer.

Advantages of Collective Bargaining
First, collective bargaining has the advantage of settlement through dialogue and consensus rather than through conflict and confrontation. It differs from arbitration where the solution is based on a decision of a third party, while arrangements resulting from collective bargaining usually represent the choice or compromise of the parties themselves. Arbitration may displease one party because it usually involves a win/lose situation, and sometimes it may even displease both parties. 

Second, collective bargaining agreements often institutionalize settlement through dialogue.

For instance, a collective agreement may provide for methods by which disputes between the parties will be settled. In that event the parties know beforehand that if they are in disagreement there is an agreed method by which such disagreement may be resolved. 

Third, collective bargaining is a form of participation. Both parties participate in deciding what proportion of the 'cake' is to be shared by the parties entitled to a share. It is a form of participation also because it involves a sharing of rule-making power between employers and unions in areas which in earlier times were regarded as management prerogatives, e.g. transfer, promotion, redundancy, discipline, modernisation, production norms. However, in some countries such as Singapore and Malaysia, transfers, promotions, retrenchments, lay-offs and work assignments are excluded by law from the scope of collective bargaining.

Fourth, collective bargaining agreements sometimes renounce or limit the settlement of disputes through trade union action. Such agreements have the effect of guaranteeing industrial peace for the duration of the agreements, either generally or more usually on matters covered by the agreement. Fifth, collective bargaining is an essential feature in the concept of social partnership towards which labour relations should strive. Social partnership in this context may be described as a partnership between organised employer institutions and organised labour institutions designed to maintain non-confrontational processes in the settlement of disputes which may arise between employers and employees.

Sixth, collective bargaining has valuable by-products relevant to the relationship between the two parties. For instance, a long course of successful and bona fide dealings leads to the generation of trust. It contributes towards mutual understanding by establishing a continuing relationship. The process, once the relationship of trust and understanding has been established, creates an attitude of attacking problems together rather than each other. 

Seventh, in societies where there is a multiplicity of unions and shifting union loyalties, collective bargaining and consequent agreements tend to stabilise union membership. For instance, where there is a collective agreement employees are less likely to change union affiliations frequently. This is of value also to employers who are faced with constant changes in union membership and consequent inter-union rivalries resulting in more disputes in the workplace than otherwise.

Eighth - perhaps most important of all - collective bargaining usually has the effect of improving industrial relations. This improvement can be at different levels. The continuing dialogue tends to improve relations at the workplace level between workers and the union on the one hand and the employer on the other. It also establishes a productive relationship between the union and the employers' organization where the latter is involved in the negotiation process.

Collective bargaining includes not only negotiations between the employers and unions but also includes the process of resolving labor-management conflicts. Thus, collective bargaining is, essentially, a recognized way of creating a system of industrial jurisprudence. It acts as a method of introducing civil rights in the industry, that is, the management should be conducted by rules rather than arbitrary decision making. It establishes rules which define and restrict the traditional authority exercised by the management.

Importance to employees
Collective bargaining develops a sense of self respect and responsibility among the employees.

It increases the strength of the workforce, thereby, increasing their bargaining capacity as a group.
Collective bargaining increases the morale and productivity of employees.

It restricts management’s freedom for arbitrary action against the employees. Moreover, unilateral actions by the employer are also discouraged.

Effective collective bargaining machinery strengthens the trade unions movement.

The workers feel motivated as they can approach the management on various matters and bargain for higher benefits.

It helps in securing a prompt and fair settlement of grievances. It provides a flexible means for the adjustment of wages and employment conditions to economic and technological changes in the industry, as a result of which the chances for conflicts are reduced. 

Importance to employers
1. It becomes easier for the management to resolve issues at the bargaining level rather than taking up complaints of individual workers.

2. Collective bargaining tends to promote a sense of job security among employees and thereby tends to reduce the cost of labor turnover to management.

3. Collective bargaining opens up the channel of communication between the workers and the management and increases worker participation in decision making.

4. Collective bargaining plays a vital role in settling and preventing industrial disputes.

Importance to society
1. Collective bargaining leads to industrial peace in the country

2. It results in establishment of a harmonious industrial climate which supports which helps the pace of a nation’s efforts towards economic and social development since the obstacles to such a development can be reduced considerably. 

3. The discrimination and exploitation of workers is constantly being checked.

4. It provides a method or the regulation of the conditions of employment of those who are directly concerned about them.

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