8-3 Short Paper: Labor Bargaining A Manchester, NH business is in the middle of a contract negotiation. The current pay rate for employees in the unit is $8.00 per hour and the union is seeking a $.50 increase per hour. The company has 35 employees in the bargaining unit and 7 employees in management. Management has come back to the table saying they cannot support such an increase and is seeking a wage freeze. As a representative on the labor bargaining team, what information, research, and data would you examine in preparing your defense? The only issue being discussed is the wage section. The company has provided the union with fiscal statements and budget outlines, which the union does not think are accurate. Where would look for information outside of the company? How would this information help you prepare your case? The issue of contract costing is very important to labor and management. One mistake can have a significant impact on the firm or the employee. Identifying, explaining, and costing the articles of a collective bargaining agreement can be a very complicated process. It is important to determine which articles in the contract have both direct and indirect costs. While wages and health insurance have direct costs, other components of the total compensation package may have indirect costs. Some indirect costs resulting from contract provisions that address such topics as seniority, layoffs, grievances, and arbitration procedures are more difficult to estimate. More subtle and complex areas to measure are found in the relationship that exists between changes in labor costs and employee attitudes. Direct costs include: o Hourly, daily, weekly, and monthly incentives o Commissions o Allowances o Tools o Clothing o Differentials o Profit sharing o Premiums Indirect costs include: o Vacation o Holidays o Sick leave o Funeral leave o Health insurance o Pensions o Social Security o Workers compensation o Unemployment insurance These three areas combined are significant in costing out a labor contract. The human resource department, financial analysts, and accountants can all play a role in preparing and conducting contract costing. It is important that management ensure that under the law, certain information that is requested by the union should be prepared and presented to the union (Herman, 1998). Generally, employee benefits can be categorized into two broad groups: time-not-worked benefits, and security and health benefits. Time-not-worked benefits include: o Vacation o Holidays o Sick and funeral leaves o Jury duty o Military service o Reporting pay o Call-in and call-back pay o Wash-up o Clothes changing time o Time spent on union business Security and health benefits include: o Life insurance o Medical insurance o Accident insurance OL 610 Module 8 3 o Workers compensation insurance o Sick leave o Pensions o Social Security o Unemployment insurance o Guaranteed annual income o Severance pay allowances
As a representative on the labour bargaining team I would look at the following information, data and research:
1. what has been the hourly wage of employees in competing industries
2. what has been the rate of inflation vis a vis the last financial year
3. what are government guidelines on hourly wages inlcuding labour laws and protection provided by the government in these circumstances
4. what has been the performance of the company (P&L and balance sheets) from SEC if its a listed company in US or from government tax filings.
5. What is the current cost to the company inlcuding both drect and indirect costs and how does it impact the bottom line (P&L).
6. what would be the impact on the profitability of the company by increasing the hourly wage rate as per the demand of the bargaining team.