Exam 5: Union Actions and Impacts

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The whole assumption behind the DUWI is that other things are equal,such as workers' experience and skill levels and the level of technology used in the plant.Often they are far from equal.Because unionized firms generally offer higher pay and benefits and sometimes better working conditions,they tend to be able to hire more highly qualified people than non- unionized firms.They may also be more capital- intense and work in them may be more intense than in non- union firms.It's therefore often very hard to say to what extent the union wage impact is a simple premium for union membership,and to what extent it's a premium for greater skill or experience or for the more intense work pace made possible by greater use of technology.

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Arguments for reduced productivity. Some people, including primarily those of a neoclassical persuasion as well as some managerialists, argue that unions reduce productivity by raising wages above competitive levels, by reducing output through the strikes that they call, and by forcing management to accept restrictive work rules which also reduce output and lead to the substitution of capital for labour, and thereby to increased unemployment. Recently, an argument often made by managerialists is that unions, particularly hard- line adversarial ones, make it more difficult for management to bring in employee involvement and other joint participation schemes, and thus reduce productivity in that way.

Arguments for increased productivity. In contrast, many people, including primarily those of an institutional or reformist persuasion, argue that unions increase productivity by reducing quit rates, which in turn reduces costly turnover. They stress unions' positive effect on morale and
worker- management cooperation resulting from union processes such as the grievance process and other mechanisms i.e., joint committees) which give workers some say in what goes on in the workplace. In addition, they note that unions can induce management to use more efficient production methods.
Finally, they point out that unions can increase productivity about the preferences of all workers, information that can help the firm select better personnel policies and a more appropriate mix of up- front pay and fringe benefits.

Overall, there is no absolute answer to this question. A great deal depends on the nature of the individual union- management relationship, which in turn may depend heavily on the history of
union- management relations in the industry and organization in question. To see whether a union has increased or reduced productivity in a particular case, one must go to the individual workplace and do a detailed case study. In many cases, given the difficulty of even talking meaningfully about productivity in some non- goods producing industries, asking about the productivity impact may in effect be barking up the wrong tree. Can we really say what constitutes productivity in much of the public sector, for example)? It might make more sense, in many cases, to ask whether unions are increasing workers' job satisfaction or satisfaction with their supervisors.