Concessionary bargaining is a negotiation strategy used primarily in labor relations where trade unions agree to give up previously secured benefits or terms of employment in exchange for new advantages or to circumvent undesirable outcomes such as layoffs or business closures. This approach often comes into play during economic downturns, financial crises, or when an industry is facing severe competitive pressures.
Definition
Concessionary bargaining, also known as “giveback bargaining,” occurs when a labor union concedes certain benefits or negotiates less favorable conditions than previously achieved, typically to secure long-term job security, wage freezes, or other forms of stability for its members.
Key Elements of Concessionary Bargaining
- Reduction in Wages or Benefits: Unions may agree to temporary reductions in wages or benefits.
- Job Security: In return, the union might secure guarantees against layoffs or plant closures.
- Future Gains: The agreement could include promises for future wage increases or other benefits when the financial situation improves.
- Company Viability: These concessions are often made to ensure the survival or profitability of the company.
Special Considerations
Economic Context
Concessionary bargaining typically arises in times of economic distress, such as recessions, bankruptcies, or increased competition from global markets. During such periods, companies may need to reduce costs to remain viable.
Impacts on Union-Employer Relations
The process can strain relationships between unions and employers, as workers may feel that their efforts are undervalued. However, it can also demonstrate a collaborative effort to achieve long-term stability and avoid more severe consequences like widespread layoffs.
Legal and Contractual Framework
Concessionary bargaining often involves complex legal and contractual considerations. Any modifications to the previously negotiated terms must be documented and agreed upon within the legal framework governing labor relations.
Examples of Concessionary Bargaining
Automobile Industry
During the late 2000s financial crisis, major auto manufacturers like General Motors and Chrysler engaged in concessionary bargaining with unions. Workers agreed to wage cuts and reduced benefits to help the companies avoid bankruptcy and massive job losses.
Airline Industry
The airline industry has also seen cases of giveback bargaining, particularly after the 9/11 attacks. Airlines negotiated wage reductions and other benefits with unions to maintain operations and prevent layoffs.
Historical Context
Concessionary bargaining gained prominence during the economic challenges of the 1970s and 1980s, particularly in industries such as steel, auto manufacturing, and textiles. Labor unions had to navigate a rapidly changing economic landscape marked by increased global competition and technological advancements.
Applicability
Modern Business Environment
Concessionary bargaining remains relevant today as companies and unions continue to face economic uncertainties. It is a crucial tool for balancing the interests of employees and employers during challenging times.
Comparison with Traditional Bargaining
Unlike traditional collective bargaining, where negotiations typically focus on improving terms for workers, concessionary bargaining involves scaling back previous gains to secure other forms of benefit.
Related Terms
- Collective Bargaining: The process of negotiating terms of employment between an employer and a group of workers.
- Givebacks: Concessions made by unions, often involving reductions in wages or benefits.
- Job Security: Protections against layoffs and unwarranted terminations secured through negotiations.
FAQs
What are common outcomes of concessionary bargaining?
Why do unions engage in concessionary bargaining?
How does concessionary bargaining affect workers?
References
- Katz, Harry C., Thomas A. Kochan, and Alexander J. S. Colvin. 2000. An Introduction to Collective Bargaining and Industrial Relations. New York: McGraw-Hill.
- Bureau of Labor Statistics. “Collective Bargaining Agreements,” bls.gov.
Summary
Concessionary bargaining is a vital strategy in labor relations, allowing unions and employers to navigate economic challenges collaboratively. While it involves temporary sacrifices, such agreements can provide long-term stability and prevent worse outcomes like mass layoffs and company closures. Understanding its dynamics helps in appreciating the complexities of modern labor negotiations.
