Explain how the actions of the trade union in the given case study below are likely to affect the employers. Meena works at Simcox Ltd, a factory making metal parts for washing machines. She is a...
Explain how the actions of the trade union in the given case study below are likely to affect the employers.
Meena works at Simcox Ltd, a factory making metal parts for washing machines. She is a member of a trade union and works as a shop steward. The union has carried out collective bargaining about pay levels, but this has broken down and the union is now in dispute with Meena's employer.
The actions of the trade union:
Meena's trade has balloted for an official strike over its pay dispute and members have voted to take strike action.
Explain how this action, if it goes ahead, is likely to affect Meena's employers.
Just as it was difficult to predict the impact of the strike on the workers, it is also very difficult to predict how this strike will affect the company without knowing about its circumstances as well as those of the workers.
The company’s situation is very important to the likely impact of the strike. If the company is well established in its market, it will be in much better condition to withstand the strike than if it is new to the market. If the firm is in a strong financial situation it is also more likely to be able to survive the strike. In such a case, the impact on the firm would be good in the long term. It would be able to reduce its costs and become more competitive. It might also break the union in the long term and thereby reduce the likelihood of having its costs forced up at a later time.
The laws of the jurisdiction where the company does business are also important. If the company is required by law to have a closed shop, it will likely be harmed by the strike. It will not be able to hire new workers and may eventually have to concede to the strikers’ demands. This will raise costs in the short term and might even do so in the long term if the workers win such things as generous pension benefits.
Thus, the strike could either raise or lower the firm’s costs, depending on its outcome.