Trade unionism amidst joblessness

The nightly TV news reporter, standing in the street next to a utility pole, and in a voice filled with alarm and concern, pointed to an open junction box full of disorderly wires and said this was a case of sabotage.

The report was on a strike by employees of Verizon Communications, a telecom company, and the reporter seemed to suggest that an employee or sympathiser must have done this sabotage as part of the strike action. He said it took over a day to set this box right but did not indicate if this was a unique case or there were more like that, for Verizon must have thousands of junction boxes.

Clearly, the line-technician of Verizon was a critical person in the company and needed to be on hand to sort through that mass of wires, respond to customer complaints quickly, and sympathetically. He was now being asked by top management to give up some of his benefits and security because the company needed to cut costs.

The employees, in turn, responded by asking why the five top management members of Verizon paid themselves $258 million (about Rs 1,161 crore) in the last four years in compensation (salary, bonuses, etc.) if they were focused on costs. The company then started releasing ads to show that its employees were well paid with good benefits!

FAT CAT SALARIES

Top management may justify continuing to receive high salaries on the grounds that their strategic decision making capabilities were required in these turbulent times. However, as the financial services industry recently established, paying top management top salaries is not necessarily the way to either get top talent or guarantee wise decision-making.

The 45,000 employees of Verizon went on strike nationally on August 7 after their contract expired. (After about two weeks, they returned to work on the previous contract while negotiations continued.) The company's demands included moving to a system where the company will contribute to a pension plan rather than pay full pension itself, tying pay increases to job performance, making employees pay more towards health care, and having flexibility in work assignments, layoffs, etc.

Verizon has been doing well financially, but it argues that the good performance is coming from its wireless division (which is not unionised) and that its landline business (whose workers were on strike) is on the decline.

Support for unions is running pretty low in America these days. Some estimate that only about 12 per cent of private sector workforce is unionised now.

Just early this year, the newly elected conservative governor (and a Republican) of the state of Wisconsin, approved a law passed by his Republican party in the legislatures which placed restrictions on the rights of public employees, including their bargaining rights, and also made them pay more towards health care and pension.

The state was running a large budget deficit. Then, a well-coordinated public opposition to the governor's actions tried to recall the legislators as punishment.

Although they lost two seats in the recall, the Republican party managed to keep control of the state's legislative chambers suggesting that there are strong feelings among the public that the unions need to be cut down to size.

On another front, 22 states in the US have passed what are called ‘right-to-work' laws, a clever name for what some see essentially as statutes to weaken unions. These laws prohibit agreements between unions and employers that require an employee to be a member of a union, either before or after hiring, or be required to pay union dues.

BOEING'S EXPERIENCE

Now, Boeing moved some of its manufacturing operations from Washington state (where it had problems with frequent strikes by unionised employees) to South Carolina, which is a right-to-work state.

And wage rates in Seattle are about twice those in South Carolina. That whole shift is now caught in a law suit as the National Labour Relations Board, a federal government agency, ordered Boeing to move back its production to Washington, because it saw the company's move as violating union rights. (A loose-tongued President of the company is reported to have said that the move was to teach a lesson to the machinists in Seattle for their past strikes!)

It is a tough time for the Verizon employees to strike, with the economy what it is and unemployment lingering at 9.1 per cent. Now, United Auto Workers (the auto industry union) has asked its employees for permission to strike if its negotiations with Ford Motor Company fail.

Let us not forget that only recently, all the American auto companies were brought to their knees partly due to costs from the accumulation of benefits they had conceded to the union when the companies were doing well.

Large companies have no patience for labour unions that restrict their operating flexibility; small businesses are looking for reduced worker obligations like health care premium requirements so they can survive in a very competitive economy. Meanwhile, employees everywhere are justifiably looking for some job security.

In such a situation, unions that try to hold to their traditional role of protecting wages and privileges not in line with the reality of the times will only find their role increasingly becoming irrelevant and public opinion turning against them.

But, if top management uses its power with the board to extract large compensations for themselves, can we complain against the unions for trying to leverage their power? It is time both sides stopped trying to extract their monopoly profits.

(The author is professor of International Business and Strategic Management at Suffolk University, Boston, US. >blfeedback@thehindu.co.in )

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