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Week 15

Labour Relations

Collective bargaining
The term collective bargaining was first used
in 1891 by Beatrice Webb.
Collective bargaining is a process in which
the representatives of business organization
meet and attempt to negotiate a contract
or agreement which specifies the nature of
the Employee-Employer union relationship
-Edwin B.Flippo

Characteristics of collective

Its a group action as

opposed to individual action.
It is a two-party process.
It is a continuous process.

Importance of Collective
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


It restricts managements freedom for arbitrary action against

the employees. Moreover, unilateral actions by the employer
are also discouraged.

The workers feel motivated as they can approach the

management on various matters and bargain for higher

Importance of Collective
Importance to employers

It becomes easier for the management to resolve issues at

the bargaining level rather than taking up complaints of
individual workers.

Collective bargaining tends to promote a sense of job

security among employees and thereby tends to reduce the
cost of labor turnover to management.

Collective bargaining opens up the channel of

communication between the workers and the management
and increases worker participation in decision making.

Collective bargaining plays a vital role in settling and

preventing industrial disputes.

Importance of Collective
Importance to society

Collective bargaining leads to industrial peace in the


It results in establishment of a harmonious industrial

climate which supports which helps the pace of a nations
efforts towards economic and social development since the
obstacles to such a development can be reduced

The discrimination and exploitation of workers is constantly

being checked.

It provides a method or the regulation of the conditions of

employment of those who are directly concerned about

Bargaining Topics

Limited success of Collective

bargaining in Pakistan

Problems with Unions.

Problems with governments.
Political Interference.
Attitude management.

Preparing for Negotiations


of negotiating information

Local and industry pay and benefits

Distribution demographics of the
Benefit costs, overall earnings levels, and
the amount and cost of overtime
Grievances and feedback from
Counteroffers and arguments.

Preparing for Negotiations


Sources of negotiating information (contd)

Attitude surveys to test employee reactions to
sections of the contract that management may
feel require change
Informal conferences with local union leaders to
discuss the operational effectiveness of the
contract and to send up trial balloons on
management ideas for change.


Bargaining Stages

Presentation of initial demands

Both parties are usually quite far apart on some issues.

Reduction of demands
Each side trades off some of its demands to gain others.

Subcommittee studies
The parties form joint subcommittees to try to work out
reasonable alternatives.

An informal settlement
Each group goes back to its sponsor. Union seeks to have
members vote to ratify the agreement.

Signing the formal agreement


Bargaining Hints

Be sure to set clear objectives for every bargaining

item, and be sure you understand the reason for each.

Do not hurry.

When in doubt, caucus with your associates.

Be well prepared with firm data supporting your


Always strive to keep some flexibility in your position.

Dont concern yourself just with what the other party

says and does; find out why.

Respect the importance of face-saving for the other


Be a good listener.


Impasses, Mediation, and

An impasse: Collective bargaining situation that
occurs when the parties are not able to move further
towards settlement.
Mediation: Intervention in which a neutral third party
tries to assist the principles in reaching agreements.
Fact finder: A neutral party who studies the issues in a
dispute and makes a public recommendation for a
reasonable settlement.
Arbitration: The most definitive type of third party
intervention, in which the arbitrator usually has the
power to determine and dictate the settlement


Any factor involving wages, hours, or conditions of
employment that is used as a complaint against
the employer.

Sources of grievances

Plant rules


Grievance Procedure

Grievant and shop steward/ union steward

meet with supervisor. If not resolved,

Employee files formal grievance

Grievant and shop steward meet with

supervisors boss. If not resolved,

Meeting with higher-level managers.

If not resolved, matter goes to arbitration.