Labor Relations and Collective Bargaining

Paper Info
Page count 8
Word count 2531
Read time 9 min
Subject Economics
Type Essay
Language 🇺🇸 US

Overview of labor relations

Origin and purposes of trade unions

The history of labor relations and collective bargaining can be traced back to the medieval times in the western world. The main workers of these times were the craftsmen who were involved in various handicraft occupations, from iron smelting to weaving. Those who held a monopoly over these crafts felt that they had the right to set working conditions, wages or product pricing, to permit or deny entry into the craft and to control the rise through its ranks. This led to the formation of guilds to address the above issues. The leadership of the guilds was however, concentrated in the hands of the business proprietors as opposed to the workers (Olivo et al, 2005).

As modern capitalism advanced and with it the spirit of competition, there was a need to form limited liability co-operations in order to boost profits and outshine the competition. During this time, many workers stopped owning the means of production and instead hired their labor services to the business owners. Slowly by slowly, as the workers increased in number, the personal relationship that had previously existed between the employer and the employee was replaced by more and more impersonal relations. The wages and the working conditions were now being determined by the market forces, employers had become distant to their employees and the state had no control over the workplace. This set fertile ground for exploitation and the working conditions deteriorated. The crafts guilds, however remained ambivalent to the workers’ needs, prompting formation of workers’ unions to protest against unfair treatment (Olivo et al, 2005).

There were attempts by workers to unionize in the early to mid 19th century in countries such as Canada and the US. Thus in Canada by the mid 19th century, permanent forms of labor organizations had begun to emerge. This laid the foundation for the formation of modern Canadian unions and subsequent similar unions around the globe. In Europe, the working class paired with political parties that reflected their interest such the socialist and communist parties. As a result, their unions were more politically based. In the US, the belief in individual liberty brought about by the American Revolution formed the groundwork for a new ideology which advocated for legal equality between classes and by extension, defended the rights of the worker (Olivo et al, 2005).

As the economy expanded the local unions also expanded and begun to set up offices in different towns or cities with the same kind of trade. With cross border expansion of business interests, International organizations soon became feasible and countries such as Great Britain and America, established branches in Canada. International Unions such as International Workers of the World and One Big Union were formed by the beginning of the 20th century and served in Canada and the US. Today, we have very many different labor organizations both local and international in different countries around the world with the same agenda- to protect the rights of the worker and to obtain greater advantages and benefits for them. The largest and perhaps most influential of them is the International Labor Organization with membership across the globe (Olivo et al, 2005).

The objectives of trade unions include determination of proper terms and conditions of employment which promote the interest of the employer, the employee and society. They also seek to establish open channels of communication and consultation between management and employees in order to solve workplace issues amicably. They are instrumental in settling workplace disputes and have been involved in the formulation of national labor policy. They also advocate for social protection where needed (Silva, ILO Bangkok).

Labor relations: Union- Management interaction

The roles of labor unions have evolved over time, from a protective role to more of a consultation and bargaining role. The relationship between the union and the management has also changed from being antagonistic to being more complementary of each other. Indeed, there are now open negotiations and consultations on subjects of varying nature.

Overall, there are three levels of union management interaction. The first one is contract negotiation whereby the unions are allowed to have a say in the formation of the labor contracts and this ensures that workers do not find themselves in exploitative, binding agreements and are treated fairly by their employers. Management solicits for ideas from union members and forms a tentative agreement which is then voted for by the union members for it to become a contract. This process is referred to as collective bargaining (Teamsters).

The second level is contract administration which is probably the single most important labor relation responsibility that management has. It involves analyzing the collective bargaining agreement that has been reached upon and ensuring that every clause is complied with. Ambiguities in the agreements usually present problems and have been known to cause employees grievances so it is important that the language used is clear and concise. The union and the employees also play a role in administering the contract by watching it keenly to ensure everything is implemented (PERMISS).

Joint consultation as the third level of union management interaction has emerged as a very important management tool. The labor relations of many countries have defined subjects over which there should be joint consultative agreements as those where there is a divergence of interests between the two parties; as opposed to negotiation agreements where both parties are deemed to have a common interest. It coexists side by side with collective bargaining and is evident even in non- unionized workplaces through an informal form of worker presentation. It is important as a channel of communication between the employers and the workers (Shimada, 1994).

Concept of collective bargaining

This is the process whereby workers organize together to meet with their employers, so as to discuss and agree on the work environment, the terms and conditions of service delivery such as in wages, working hours and grievance procedures, as well as the rights and responsibilities of the union. If there is no labor union, then it is done informally through worker representatives.

Collective bargaining models

A number of academic disciplines have put forward various models that attempt to capture this concept. Collective bargaining has largely been viewed as a human right and therefore deserving of legal protection. This is supported by the International Labor Organization Declaration of Fundamental principles and Rights at work. Under item 2a, collective bargaining is clearly classified as an essential right of workers.

The first model is the monopoly union model in which the union exercises a monopoly in the labor market. To this end, the firm decides on employment after a monopoly union has determined the wages. The unions’ power to maximize wage rate enables them to avoid the exploitation of the workers (Booth, 1995).

The second model is the right- to-manage model where both the labor union and the firm bargain over the wage rate. It is referred to as the right to manage model since the firm retains the right to determine employment unilaterally but bargains on the wage rate with the employees. Economists see this theory as being inefficient because the workers’ union could be made better off by being allowed to bargain on employment as well. This gives rise to the third model, the efficient bargaining model where both the union and the firm bargain on wages and employment. This means that no one can exercise undue power over the other (Booth, 1995).

The bargaining process

This Harvard Law school program on negotiation has described the collective bargaining process as being divided into the following five core phases:

The first phase is on preparation and framing. This basically involves examining the prevailing situation of both sides in order to in order to develop the appropriate framework for bargaining that gives weight to the most important points. The phase also involves one party examining its interest vis-Ă -vis the interests of the other (Mackinac, 2007).

The second phase involves setting the ground rules for negotiation, or in Harvard Language, bargaining over how to bargain. The rules are set, the frequency and venue of the meetings and any logistics are pre arranged (Mackinac, 2007).

The third phase is the brainstorming session in which all the different situations are brought up as well as the possible options that will help in solving them. At the fourth phase, there is focusing and agreeing on each issue and the fifth and final phase is in implementation and administration of the negotiated policy (Mackinac 2007).

Impact of collective bargaining on the workforce

The basic importance of collective bargaining has been to give workers a voice so that they have a say in the formulation of the work place policies. This is very crucial in the development of healthy relationships at the work place, between the employer and the employee. This in turn has the effect of creating opportunities for even more effective bargaining which view change management and problem solving as very important work products (Colosi et al, 2006).

Through collective bargaining, workers have been able to advocate for better working conditions. They are now entitled to safety at the work place with compensation where occupational injury occurs. They can now negotiate on the working hours, have access to fringe benefits, allowances, paid leave and pension packages.

Socially, they are able to interact more freely with their employers due to the healthy relationship that they now enjoy, they do not feel exploited and are thus more productive and well adjusted individuals, even in their private lives. Certainly, collective bargaining has improved the conditions of the working class and enhanced performance at the workplace.

Labour relations and human resource management

Labor relations have undergone tremendous changes since the inception of trade unions in the 19th century. The use of collective bargaining as a tool in promoting labor relations has emerged due to increasing competition and the increasing importance of quality of goods and services as well as the skills involved. This has in turn influenced the human resource management policies and practices. The basis of this is that to enhance business performance, there is a need to properly administer the company’s most valuable resource which is human capital, so as to ensure optimal functioning. Managing people in a way that motivates them to be at their most productive is one of the principle functions of human resource management and this can only be achieved through healthy labor relations (Silva, ILO Bangkok).

There is, however, a theory of conflict between labor relations and human resource management, whereby the former is viewed to be an impediment to the objectives of the latter. Human resource management represents a set of managerial objectives that are mainly involved with the improvement in employer – employee relationship (individualistic outlook) and management of human resources so as to enhance performance, employee commitment and the quality of work. It is seen to focus more on the individual workplace relationship than with the worker representatives. This leaves limited room for the more pluralistic labor relations, which other than individual workplace relationships also focus on the relations between employers and the union and also on matters of employment and the state which typically accords workers certain rights and freedoms. In this respect, labor relations are seen to play only a subsidiary role in the human resource system. Human Resource Management practices are sometimes perceived to have been used as a union avoidance strategy (Silva, ILO Bangkok).

However, human resource management and labor relations share the same objectives which center on fairness and equity. As such, their goals are not very different and their activities can be synchronized. The answer lies in changes in the mentality and thinking of both the union and management. The two should carve out a role for Human Resource so that it complements the objectives of either side rather than antagonize them. The unions can be involved in consultations at the workplace on new Human Resource Management initiatives so that they are in a position to respond and participate in them. This will however depend on how accommodative management is to the unions (Silva, ILO Bangkok).

Success stories can be drawn from countries such as the US who in the 1970s, were not keen to involve trade unions in the workplace but soon found that this was hurting their productivity. Today, there is a greater involvement of labor relations in the change process. Japan also has a successful blend of labor relations and human resource management at the workplace, made possible through their joint consultation system. In Britain, some companies have successfully run labor relations and human resource management parallel to each other, implying a feasibility of dual management (Silva, ILO Bangkok).

Labor relations are therefore a very important component of Human Resource Management and should be incorporated as much as possible into the system. HR professionals, especially in big firms and industries must, as a matter of priority, be knowledgeable on labor relations. In fact, collective bargaining between management and union should ideally be between the trade unions and these professionals, who then evaluate the selection, performance and compensation criteria and systems for the upper management to enhance productivity. Indeed, labor relations are an important precondition in performance improvement, even in a non unionized work place. Knowledge on labor relations enables the HR professionals to be effective and to implement fair labor practices that will appease the existing union or preempt the formation of one in a non unionized workplace, if the company is keen to avoid unionization. Knowledge of labor relations also enables them to avoid company law suits as most labor relations are protected and regulated by the law (Leftwich, 2003).


Labor relations are a fundamental worker’s right. They involve the freedom to unionize, negotiate for collective agreements on better terms and conditions of employment, the right to strike and the establishment of harmonious relationships between the worker and the employee. Where this relationship has been achieved, the productivity of the workers is said to be optimal. After a negotiated agreement, it is the duty of the management to ensure that the agreement is implemented as the union plays a watch dog role. Labor relations are also a fundamental part of the Human Resource function and so all future efforts to improve the workplace should have labor relations in mind.


  1. Lawrence M Olivo, peter Mc Keracher, Larry Olivo, Labour relations: the unionized workplace, published by Emond Montgomery publications 2005.
  2. Human Resource Management, Industrial relations and achieving management objectives. By S.R de Silva, senior specialist in employers’ activities. East Asia multi disciplinary advisory team, ILO Bangkok.
  3. Alison L. Booth, The Economics of Trade Unions, Cambridge University Press, 1995.
  4. Worker participation in management decision making. A draft prepared for the conference on international evidence commission on the future of worker management relations. Haruo Shimada, professor, Keio University, Tokyo Japan, 1994.
  5. Thomas R. Colosi, Arthur Elliot Berkeley, Collective Bargaining: How it works and why: a manual of theory and practice, Jurist Publishing Inc. 2006.
  6. The collective bargaining process, Mackinac centre for public policy,2007.
  7. Howard M. Leftwich,, Labor relations: still relevant for HR Professionals?

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EduRaven. (2021, November 6). Labor Relations and Collective Bargaining. Retrieved from


EduRaven. (2021, November 6). Labor Relations and Collective Bargaining.

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"Labor Relations and Collective Bargaining." EduRaven, 6 Nov. 2021,


EduRaven. (2021) 'Labor Relations and Collective Bargaining'. 6 November.


EduRaven. 2021. "Labor Relations and Collective Bargaining." November 6, 2021.

1. EduRaven. "Labor Relations and Collective Bargaining." November 6, 2021.


EduRaven. "Labor Relations and Collective Bargaining." November 6, 2021.


EduRaven. 2021. "Labor Relations and Collective Bargaining." November 6, 2021.

1. EduRaven. "Labor Relations and Collective Bargaining." November 6, 2021.


EduRaven. "Labor Relations and Collective Bargaining." November 6, 2021.