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Management & A welfare economics assessment Essay

Collective bargaining is defined as joint regulation under which wages and conditions of services are settled by a bargain struck between employers and their associations on one hand and workers’ associations on the other. Consequently, collective bargaining benefits both employer and employees covered by an agreement by guaranteeing equality of treatment where settlements are industry-wide or cover a large group of public employees. Collective bargaining agreements have a wider influence than on just the employees covered.

Collective bargaining is carried out under certain fundamental principles. The first and most important principle is Individual Freedom (Winch, 1989). The unit of human labor is a human being and the system exists to best serve his/her interests. Since to consume we must produce and to produce we have to work, each human being can be considered a self proprietor of their own human capital. He/she is free to decide on the nature and extent of their employment so as to play a valuable role in the social and economic structure.

When it comes to private property, individual freedom denotes that the owner of land or physical capital is free to decide on the extent and the way in which his resources will be utilized. The

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second principle is Integrity which is vital to an economic system that is based on free contract. Freedom to enter contracts implies freedom to negotiate, bargain over terms and to associate with others in the process of bargaining. This freedom is only meaningful if there is confident expectation that the contracts will be honored.

Individuals should be bound by contractual terms of contracts that they have voluntarily entered into. This principle requires the existence of a legal system capable of protecting individual freedoms by interpreting contracts in cases of ambiguity etc. Equity is yet another principle of collective bargaining that requires individuals to have equal rights as members of the economic society and also to have equal right of access to markets.

Equity requires that the contractual disputes between parties be resolved fairly and that the relative wage rates attaching to different occupations in society reflect the relative values of those occupations. This principle calls for fairness in income distribution trends and it is only fair that persons who perform services of greater value to society should receive commensurate incomes. The principle of Efficiency stresses that whatever the chosen disposition of disposable income, the goods and services bought by that disposable income ought to be produced efficiently.

The services of the labor force should be used efficiently and this can be achieved only if those employing such services are charged a price that reflects their value to society. Full utilization, proper allocation and efficient degrees of security and mobility- all properties of an efficient labor market- should be exhibited. Lastly, the principle of Standardization must be expressed in restrictive regulations that will prevent changes in the terms of the labor agreement during its lifespan. True collective bargaining requires uniformity of wages and work conditions.

A uniform minimum standard must exist below which no member of the group would consent to work. These fundamental principles of collective bargaining are maintained most effectively by organization of the workers. For workers, collective bargaining finds its true expression in trade unionism and for employers; the employers’ association is the logical medium. References Winch, D. M. (1989). Collective bargaining and the public interest: a welfare economics assessment, Canada: McGill-Queen’s Press.

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