MODULE 8: Labor Unions

1. What are the underlying principles that give rise to labor union?
Labor unions commonly arise from manufacturing firms. Since factories offer
lower basic pay on workers than those in offices, management often neglects the
status of their rank and file. So to have leverage in all labor aspects and to push
for the workers rights, three important principles were conceived by the union:

Unity or Collective Action

In unity there is strength. A labor union is stronger than an individual or a small

group of workers so that if there are grievances in their camp, they are one in
voicing these out to the management. And when there is call for a mass protest,
the action can send a stern warning to the management not to neglect this
action.

Bargaining Power

It is the power to negotiate. Bargaining Power is the ability for firms or workers to
get what they want.
An example of bargaining power is related to the power of trade unions. If a
single worker works for a monopsonistic employer, its bargaining power is very
weak and he is likely to get paid a low salary.
However, if workers join a trade union and achieve 100% density (i.e. everyone
in the firm joins) then they have the capacity to influence the wage making
process.
Bargaining power of Trade Unions will increase when
100% Density
Low Rates of Unemployment
Profitable Firm
Political support for Union
Union funds for a long term strike
If they are producing a key good

Political Power

The labor movement is one of the important ways that individuals can feel
connected to each other in ways that makes political activity seem relevant.
A strong union movement does more than give people the kind of life
experiences than affects their identities and builds a sense of connectedness and
solidarity. It also solves crucial organizational problems. Unions provide
information to their members helping to mitigate the problem of rational
ignorance around political issues, and they lower significantly the individual costs
of active participation. Unions typically become, as organizations, directly
involved in political parties. In electoral campaigns this helps parties solve a
crucial problem mobilizing people for electoral campaigning, both as voters and
as volunteer campaign workers. A strong union movement can help provide the
volunteer legwork for practical electoral activities and in this way counteract the
influence of money in campaigns. This is an important reason why, where unions
are strong, voter participation rates are higher and public policies tend to serve
the wider interests of ordinary citizens rather than just elites.

2. When does labor dispute occurs?

A labor dispute is a conflict which arises over the terms negotiated in collective
bargaining agreements mediated by a union. Labor disputes can occur while the
union is working with the employer to negotiate an agreement, or when an
already established agreement is violated. If labor disputes escalate, they can
develop into strikes, in which the employees do not report for work until the
dispute is resolved. This can become extremely costly very quickly and can lead
to situations in which governments may be forced to intervene.
The origins of labor disputes can lie in any number of disagreements about the
terms of an agreement. Employers may balk at wages, limits on hours, and other
aspects of an agreement. Likewise, unions may refuse to endorse an agreement
which they feel does not offer enough benefits to their members. Labor disputes
can also occur as a result of violations of the agreement which result in a report
to the union. For example, an employee who is not compensated properly would
report it to a union representative, who would take the employee's case up with
the employer in order to resolve it.
Workers, unions, and employers all want to avoid labor disputes. Missing work as
a result of a dispute hurts employees as well as employers, and being unable to
negotiate an agreement is not helpful either. However, there may be certain
things which people view as nonnegotiable, and sometimes that results in
situations in which disputes arise because neither side wants to give way, or one
side feels that its sticking point is important enough that it cannot compromise to
end the labor dispute.

Representatives of the union and employer, including lawyers, can attempt to

negotiate a labor dispute before it snowballs into a strike or similar employee
action. Sometimes these negotiations attract attention from the media, especially
when the dispute involves an industry in which many people are interested. A
labor dispute at an airline, for example, may be followed closely because it can
lead to a strike which may complicate air travel.
The goal of the union is to represent the interests of the employees and to make
sure that they are protected. Unions place a high priority on safe working
environments, fair compensation, and limits on how employees may be utilized.
Many labor disputes stem from one of these three issues, because they are so
key to the union and they can become critical points in contract negotiations
which turn into a labor dispute.

Case Analysis:
Give your own analysis of the following:
The president/owner of a company was so disgusted over the unreasonable
demands of the union. He was also incensed by the arrogant behavior of the union
officers. A day before the start of the CBA negotiations, without consulting his Board
of Directors, he decided to lockout all employees, close shop, stop the entire
business operations of the company. Is the lockout legal or illegal?

The Labor Code of the Philippines states that:

Art. 264. Prohibited activities.
a. No labor organization or employer shall declare a strike or lockout without first
having bargained collectively in accordance with Title VII of this Book or without first
having filed the notice required in the preceding Article or without the necessary
strike or lockout vote first having been obtained and reported to the Ministry.
No strike or lockout shall be declared after assumption of jurisdiction by the
President or the Minister or after certification or submission of the dispute to
compulsory or voluntary arbitration or during the pendency of cases involving the
same grounds for the strike or lockout.
Any worker whose employment has been terminated as a consequence of any
unlawful lockout shall be entitled to reinstatement with full backwages. Any union
officer who knowingly participates in an illegal strike and any worker or union officer
who knowingly participates in the commission of illegal acts during a strike may be

declared to have lost his employment status: Provided, That mere participation of a
worker in a lawful strike shall not constitute sufficient ground for termination of his
employment, even if a replacement had been hired by the employer during such
lawful strike.

Analysis:
At first glance, the company could have violated the unions right to Collective
Bargaining. Unless there were previous talks related to the CBA prior to the
bargaining which are integral part of the agreement and unless a notice of lockout
was sent to the Department of Labor by which the union was also served a copy, the
lockout was legal.
Most CBAs today do pre-Bargaining Talks to feel out each sides bargaining
leverage. It can be used by either side to posture or commit any disputable acts by
which only the court can decide.
Lockout is the anti-thesis of strike. It is the ultimate weapon the management uses
against a very strong union. Legal or illegal, it greatly affects the living conditions of
the locked employees. All labor cases go the full distance in court, taking years to
resolve unless it is classified as national interest. A simple lockout when challenged
in court can put the union in hunger. It is an effective strategy being used by
companies to weaken a strong union.
In my opinion, the company has violated the Labor Code and has committed an
unfair labor act based on the short case presented.
But there are other things to consider, other incidents that can put this matter to light
before it is proven illegal.
Let the courts decide.