Disadvantages and Alternatives to Public Sector Strikes Essay

Strike replacement occurs when employers hire or use individual to perform the work of employees on strike. In the United States, it is not unfair labor practice for employers to replace the striking workers with others in effort to carry on the company’s business. Most other industrialized nations, however, do not allow permanent strike replacement. The United States is already unique among its trading partners in allowing permanent strike replacements and ban on permanent strike replacement would probably raise labor costs and harm international competiveness. For decades, employers have been permitted to hire permanent replacements for striking employees, Congressional action may change this situation, and however, any legislative changes on this issue will most likely become a political hot potatoes for most member of congress or face a probable presidential veto. (Budd, J.W) â€Å"But to maintain a balance of power between employees and employers, hiring permanent replacements is not allowed† and The United States Congress should outlaw the use of permanent replacement workers during strikes and I would argue the followings: workers investments, minimize strategic behavior, encouragement of collective bargaining, voice, Mackay doctrine, role of the law, employer has no real incentive to negotiate, Striker replacements, mandatory or permissive issue, What if negotiations fail and Italian model and Advantages, Disadvantages and Alternatives to Public Sector Strikes. I assert that the key distinction that should be made in the law of striker replacements is one based on the degree of firm ­ specific investments made by the workers involved in the strike. By focusing on that feature, the law  could prevent the use of a strike or the hiring of permanent replacements as an opportunistic behavior weapon designed to expropriate the other party’s rents. Although several proxies could potentially be available to the courts or the NLRB, there are no clear guidelines or definitions that facilitate such distinctions. Banning of replacement workers during strike would further the argument that if Congress make the decision of whether to hire striker replacements a mandatory issue of bargaining, unions and employers could make the distinction between firm-specific and general investments made by workers and thus enforce the contract so as to minimize strategic behavior. Outlawing strike replacement workers would support among the goals of the National Labor Relations Act (NLRA) which was the promotion and encouragement of collective bargaining. The sponsors of this Act viewed collective bargaining as the means to promote a new labor policy without having to directly regulate the terms of the employment relationship. In enacting the NLRA, Congress rejected a more interventionist approach and opted instead for a system that emphasized the distinct roles of labor and management in which outcomes were to be determined by the ability of the parties to impose economic pressure on each other through the negotiation process. Furthermore, it is somewhat ironic that among the several alternatives that have been progressive to deal with the striker replacements issue, in cases where replacement workers were used, there has been no attempt to use the collective bargaining process as a possible solution. But by incorporating the striker replacement decision into the bargaining process a non-zero-sum situation can be created which makes both parties better off, while at the same time advancing the NLRA’s objectives of industrial peace and collective bargaining by protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection which is voice, and I contend that bargaining over the striker replacements issue creates a cooperative solution because in the cooperative game theory of bargaining, the parties can both benefi t by cooperating with each other. Banning Strike Replacement would further support Mackay doctrine to distinguish between â€Å"opportunistic behavior† by either the union or the employer, and behavior that is â€Å"no opportunistic.† Therefore, whatever modification proposal is introduced should be measured by its ability to redress this problem of strike replacement. The United States Congress need to ban strike replacement because I would argue here that the law if passed is based on the assumption that through the negotiation process the parties themselves will be best able to resolve disputes concerning the hiring of striker replacements by making the necessary trade-offs and establishing rules that commit them to mutually enforce the contract. In the law and economics parlance, if someone values an asset more than its owner, then there is scope for mutual gain by exchange. Though, under the Mackay approach to striker replacements, the decision to hire striker replacements is not amenable to resolu tion through the collective bargaining process because the rule makes bargaining over this decision too costly for a union and makes it easy for an employer to behave opportunistically. Strike Replacement Ban by United States Congress if enacted should then focus on providing the proper framework in which negotiations or mutual exchange should take place. In this sense, the role of the law is threefold. First, the legal framework should allocate the initial rights or entitlements in a way that increases the likelihood of successful bargaining. Second, the law should seek to minimize the transaction costs associated with bargaining. Finally, the legal framework should provide adequate enforcement mechanisms for cases in which bargaining fails. However, bargaining situations characterized by zero transaction costs are rare. If there are no obstacles to exchanging legal entitlements, they will be allocated efficiently by private agreement, so the initial allocation by the courts does not influence the efficiency of the final allocation; and the assignment of property rights does not matter when the transaction costs are zero. By negotiating to an impasse and then hiring permanent replacements. The employer has no real incentive to negotiate over the striker replacement issue because any negotiation will by definition make the employer worse  off. Even if the union places a high value on protecting at least those employees that are subject to opportunistic behavior, and even if the union is willing to compromise on the protection of other (less-skilled) employees or on any other issue, no bargaining is likely to ever take place under the Mackay rule. In this sense, and using the language of bargaining theory, the Mackay doctrine makes it less likely that bargaining will take place and in that sense it is inefficient. It is necessary, therefore, that any reform pro ­posal start by changing the initial allocation of rights, by granting union protection against the hiring of permanent striker replacements. On the other hand, giving unions protection against the hiring of permanent replacements, without an ything more, will also result, as developed above, in the likelihood of opportunistic behavior by the union. Thus, if unions are allowed to strike, knowing that their members cannot be permanently replaced, they will be free to engage in strikes and in that way negotiate more freely. Ban on Strike Replacement would more likely if making the striker replacement issue a mandatory subject of bargaining, therefore, providing this protection, will make it more costly for employers to force a strike in the hope of getting rid of the union. The employer will only be able to accomplish this by paying a fairly high price. Even though another means of union bursting is closing operations. By making it a mandatory subject of bargaining, will minimize transaction costs by giving the union, the party which probably values this right the most, the opportunity to exchange the protection against permanent replacements for other bargaining demands they might value more highly. In this sense, the proposal facilitates bargaining by making more explicit the types of exchanges the union has to make. Striker replacements: mandatory or permissive Issue? The NLRA imposes on the employer and the union a duty to bargain in good faith. This duty requires the parties to bargain to impasse over mandatory issues. Permissive issues can be brought to the bargaining table, but neither party is required to bargain over them. But a question that is likely be raised by the proposal of banning strike replacement workers would be, is whether the duty to bargain over the decision to hire permanent. The rationale for arguing that unions will, as opposed to the employer, be more likely to bargain over the  striker replacement issue if given the initial legal entitlement, is based on the realities of the industrial relations process. First, the protection against striker replacement does not make the strike a â€Å"risk free† venture for the union. The adversity of doing without a paycheck and health insurance puts enormous pressure on the strikers to settle a dispute as soon as possible. Most American workers have no cushion, no money socked away to make house payments and car payments, to buy food or to pay doctors’ bills. Second, unreasonable pressures or unwillingness to bargain over this issue could represent a matter of survival for the union. Workers have no incentive to make demands that will throw their employers into bankruptcy or otherwise cause permanent economic harm to their employers. The worker, after all, is dependent on the employer’s long-term economic health. Workers realize this, and this realization significantly moderates worker demands. What is the scope of this duty: For the purposes of my argument, to bargain collectively is the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment. The Supreme Court classified subjects of bargaining as mandatory, permissive, or il legal. Mandatory subjects are defined as those that regulate wages, hours, and other conditions of the relationship between employer and employees. Permissive issues are those dealing with subjects other than wages, hours, and working conditions. Replacements can be characterized as a mandatory issue of bargaining. I would contend that bargaining during contract negotiations over the utilization of striker replacements in the case of a strike should clearly be considered a mandatory topic. Although there do not appear to be any cases directly on point, the striker replacement issue could be considered a mandatory subject based on several grounds. First, like a no-strike provision, bargaining over the use of striker replacements involves a critical aspect of the relationship between the employer and the union, and should on these grounds be seen as a mandatory bargaining subject. Second, similar to work rules such as attendance and absenteeism policies, the striker replacements decision deals with the obligation of the employees to report to work under the employment contract. As such, they regulate an issue central to the day-to-day employer-employee relationship, and finally, making the striker  replacements provision a mandatory issue of bargaining could be sup ­ ported as a means of advancing the objectives of the NLRA in evading industrial conflict and what happens if all out negotiations fail. What if negotiations fail, it could be argued that if Congress by banning Strike Replacement will not, in practice, produce results any different than could be accomplished by merely overruling the Mackay doctrine. Thus my contention could arguably say that bargain to impasse over the striker replacement issue, call a strike, and then behave opportunistically, because employers will not be allowed to replace economic strikers. I argue from both a practical and theoretical perspective that a contrary dynamic will likely prevail. As discussed above, the bargaining process by distributing the initial allocation of rights in a way that is conducive to mutual gain exchange. Bargaining over the striker replacement issue is not likely to occur under current law because employers are given the right to permanently replace strikers and the general issue is not clearly defined as a mandatory topic of bargaining. Thus, under the current scheme of things, there is almost no incentive for employe rs to bargain with respect to this issue. By overruling Mackay, while at the same time making the striker replacement issue a mandatory topic of bargaining, it increases the likelihood that the two parties will reach an agreement. The collective bargaining agreement between the International Brotherhood of Electrical Workers and the Olin Corporation, for example, provides: The employees as well as the Union shall cross all picket lines for the performance of work which is essential to the maintenance of the Company’s plant and equipment for standby operations.†189 Similarly, the agreement between the Steelworkers and Harbison-Walker Refractories, provides that: No strike or lockout shall occur at the establishment covered by this Agreement during the life of this Agreement, and continuous kilns shall be maintained at all times at a temperature which will result in no loss of ware or damage to the kilns, and periodic kilns under fire shall be burned off. Pumping operations shall also be continued during any strike or work stoppage that may occur. These two labor contracts clearly indicate the ability of unions and employers to, through the collective negotiations process, devise rules governing behavior in the event of, and during, strikes. An instructive example can also be found in  recent labor legislation enacted in Italy which regulates strike activity involving essential public services. Act 146 of the Italian Labor Code, enacted in 1990 follows the recent trend in Italian labor law towards consensual regulation. It relies in part on collective bargaining as the means of regulating the impact of strikes on the provision of essential services. Indeed, collective bargaining agreements have proven to be the main source of strike regulation under the new Italian law. Agreements have been negotiated with respect to most of the so-called essential services covered under the Act. Bargaining has occurred at both the national and local levels, with local agreements being used as a means of tailoring the rules to the specific needs of the participants. For example, the national agreement covering urban and suburban transportation establishes the principle that during a strike, service must be guaranteed for six hours a day at â€Å"peak times.† The local agreements then specify the definition of peak times and indicate the number of employees required to guarantee the service, as well as the way of selecting those employees. The Italian experience demonstrates, albeit in a different setting, that bargaining is likely to occur on the issue of the regulation of strike activity when and if the proper legal framework and structure is provided to the parties. Although I am not advocating the adoption of the Italian model in the United States, I believe that it provides some hope that a negotiations approach to the striker replacement issue of the kind we have here could bring positive net results to unions, employees, employers, and the general public. In sum, the striker replacement issue and the outlawing or legislative over ­ ruling of the Mackay doctrine are highly controversial and command considerable attention. The issue is, as exemplified in the strike during the fall of 1993 at American Airlines, fraught with emotion, with one side decrying the â€Å"union-busting hiring of scabs† and the other pronouncing the right to hire permanent striker replacements as essential to the preservation of free enterprise and a free society. Though, economic  efficiency of the Mackay doctrine as it currently operates, I would however, dispute the debate that the Mackay doctrine promotes â€Å"economic efficiency.† In particular, I content that employees that have made firm-specific investments are â€Å"inefficiently† vulnerable to an employer’s opportunistic behavior given the ability of employers to permanently replace such workers during a strike. To reform this situation I advocate: (1) the repeal of the Mackay doctrine, thereby granting unions protection against the hiring of permanent replacements; and (2) requiring that the issue of striker replacements be explicitly made a †mandatory† bargaining subject under the NLRA, with any agreements regarding this issue clearly surviving contract expiration. With the 1990 Italian strike regulation statute serving as a general model, the idea is that the resolution of this controversial issue can be most efficiently accomplished through negotiations between the parties themselves. I highly recommend these proposed statutory reforms to Congress and others currently studying reforms of the NLRA. There are however, differences, advantages and disadvantages between private and public sector strikes. (Budd, 2013) â€Å"Prohibiting public sector strikes is rooted in several traditional beliefs: that striking against the government is an unacceptable threat to the supreme authority of the government, that public sector employee bargaining power is too high there are no markets-based checks on their demand, and that government services are too critical to be interrupted†. Advantages and Disadvantages to Public Sector Bargaining From the perspective of the public sector union and the workers they represent there can be seen a number of advantages and disadvantages to bargaining in an environment like the public sector. Advantages: A few of the advantages available to union bargaining representatives seem simplistic in nature, but there is a definite advantage present. First of all, public sector employers do not have the option of relocating. One very important bargaining advantage possessed by public sector unions concerns the mopolistic nature of public services. Public sector labor can exert more pressure than can their private sector counterparts because there are generally few good substitutes available for public services, and any withholding of these services will immediately be felt by those depending upon the service. This increases the incentive for public employers and managers to settle with the union and avoid any action by the union which might result in their having to face an angry public. In case of impasse and strikes occurs: Advantages available to public sector unions and employees as a bargaining tool is the potential that a strike can have as a bargaining weapon in some ways the strike has the potential for being more formidable tactic for the public worker than for private sector unions. For many government services there are few good substitutes available for the service. When the service is denied by a public worker job action, then the public has few available alternatives to turn to in place of the service. The greater the inconveniences to the public brought about by the strike, the greater is the pressure up on the public employer to make concessions and end the work stoppage. Unions can also strikes in the public sector so that they occur when they are the most politically effective. This also increase the incentive for an early settlement. In short, the effectiveness of the public sector strike depends upon public opinion and consequent political pressure that would coerce management in the public sector to concede to the demands of labor. Disadvantages: So far it may seem that labor has controlling advantages in terms of the public sector bargaining relationship, but some very definite disadvantages also face unions in the public sector. The political process and decision approval in the levels of benefits to public workers go through political process. Public managers have far less authority and flexibility in their decision making than do their private sector partners, and the decision making process may take place far away from the actual agency. Strikes in the public sector, labor relations, and the issue which is most controversial and elicits the most attention is the strike issue. In the  past, public sector workers have frequently resorted to the work stoppage in an attempt to exert pressure on public sector management. These workers actions have net with varying degrees of disfavor from public sector management, and have had mixed results as to being successful. There is an important economic implication of denying public employees the right to engage in a work stoppage. In order for the rights of public workers under collective bargaining to be upheld there must be some sort of cost or incentive for managers to bargain seriously. The public sector strike, however, has a few disadvantages which can keep it from being effective. While strikes in the private sector impose costs upon management by preventing the organization’s operation, strikes in the public sector exert no economic pressure. However, there are alternatives to the strike, the strike has significant potential as a bargaining tool in the public sector, but the problems involved with the strike make it a very risky and unpredictable tool to use. There are a number of alternatives to the strike that perform the same basic function as the strike weapon does, namely, that of protecting the right of public workers to bargain effectively. These alternatives also have the added advantage of protecting the rights of public sector employers as well as the general public. Such alternatives are not equal in effectiveness, however, and each possesses its own unique advantages and disadvantages over other types of dispute resolution. Fact Finding: finding is used, the two parties to a dispute select a neutral third party to act to investigate the dispute and to submit recommendations as to the proper course of action. It is not the job of the fact finder to reach an agreement on the dispute. It is important to note that the fact finder’s report is advisory and not binding in nature. One or both of the parties to the dispute may reject the recommendations of the fact finder. The fact finder’s report, however, will become a part of the public record, and if one party has taken an unreasonable stance in bargaining this will soon become apparent to all. In public service industries sensitive to public opinion, the threat of publication is particularly effective as an incentive to bargain in good faith. Another alternative is the mediator who acts as an advisor in bargaining to both parties, and uses his own persuasive influence and other techniques available to him to bring the  parties to an agreemen t