Unionized industries - Aussie Stock Forums

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  1. #1

    Default Unionized industries

    Hi all,

    Does anyone know the advantages and disadvantages of a unionized industry?
    I'd like to know about this so I came for help to the best place which is right here, ASF

    Thanks in advance

  2. #2

    Default Re: Unionized industries

    Quote Originally Posted by viciam View Post
    Hi all,

    Does anyone know the advantages and disadvantages of a unionized industry?
    I'd like to know about this so I came for help to the best place which is right here, ASF

    Thanks in advance
    You live in it UK.
    You should be telling us!

    Unionism is good for the workers till unions get wind of their self-importance.
    Then they degenerate into subscription collectors.
    Membership falls alarmingly until ...

    Bad unions act as brakes on companies, industries and ultimately countries.

    Look no further than Thatcherism!!

  3. #3

    Default Re: Unionized industries

    Unions are definitely a double edge sword that's for sure. They do some good, they do some bad.

    I've seen unions work well when the members are driving the union, not the reverse. That requires a willingness of the members to go against the union when the situation warrants (ie the members call the shots, not union officials). That can work well, but would be difficult in a large group.

    The big problem with both unions and bosses is that neither tends to see the bigger picture. Excessive wages and lack of productivity will destroy the economy for sure. But then outsourcing, casualisation and especially offshoring is a pretty good way to end up with the same result too. Both tend to be focused only on the short term and only what's in it for them. Neither tends to worry too much about the future either of themselves or of society as a whole.

    At some point unions are forced to face the reality that an unprofitable business won't employ their members. And we're not far from the point where business will be forced to face the reality that workers without decent pay and secure jobs won't buy their products in the first place.

    Excess union demands caused havoc in the past that is for sure. Meanwhile an unconstrained short term focus on the part of business has pretty much stuffed most Western economies over the past couple of decades. Thatcherism, or "microeconomic reform" as we called it in Australia, didn't really work in the long term. It just kicked the can down the road and lead us to where we are now - and for most Western countries that's not a good outcome.

    I'll give you a specific example from the energy industry. 30 years ago the problem was "gold plating" driven by government-owned authorities and their need to keep unions on side. Then along came all the radical reforms which turned the industry on it's head. Now, 30 years later we have a problem - "gold plating" on a massive scale to the point that even the general public is all too aware of it due to skyrocketing bills. 30 years of radical reforms and we're actually in a worse position than before it all started - costs have gone up, not down, in real terms over that period. All that's really changed is who owns what and how people are employed - it hasn't delivered a measurable benefit to consumers or even fixed the very problem it was initiated to fix.

    So we need a balance in my opinion since neither side has it right. Economic rationalism hasn't worked in the way it was supposed to just as everything that came before it had problems too. Union, non-union, socialist, capitalist, monopoly, competition, free trade, protectionism - all of it has good points and bad, with the truly bad things usually being associated with the "trying to fit a square peg in a round hole" scenario.

  4. #4
    CanOz's Avatar
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    Default Re: Unionized industries

    Great post Smurf Well Said.

    Can anyone think of any businesses where the Union and Company co-exist really well together to preserve the profitability of the business whist maintaining good wages and conditions for it Union members?

    One that i can think of was Masterfoods. I'm not sure what its like now but when i lived in Australia they were THE model.
    "Dump everything aggressively. Take the price to a place where it trades" - Michael Platt - Hedge Fund Market Wizards

  5. #5

    Default Re: Unionized industries

    In addition to industries where most (or all) workers are members of a union as such, there are others which could be considered as a "closed shop" far more than traditional blue collar unionised jobs / industries.

    Examples which come to mind include the legal profession and in many places the state or national public service. Unionism may not be compulsory as such in the PS, but the practice is that negotiations over pay etc only ever take place between government and unions - the outcome for any individual worker depends on the union whether they are a member or not.

    Then there's industries which are more blatantly protected. Taxis come immediately to mind there - it's one of the few things around which on one hand are privately owned but on the other are effectively regulated by government. Government decides how much competition there will be, government decides what the fares will be etc. A lot of industries used to be like that, taxis being one of the few remaining ones.

    And of course the "too big to fail" type operators. There need not be a union in sight (but typically there are plenty) for these companies and their workers to be considered as somewhat protected.

  6. #6
    sydboy007's Avatar
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    Default Re: Unionized industries

    I think if you see how the German mittelstand operates that is a good template for a way forward.

    I'd also like to see the average worker getting a profit share as well. Look at the new agreements for the gas industry in Canada. Worker pay rates will go up if gas prices take off, and stagnate if they don't. That way workers take part in the growth or not of the company profits.

    I do find it hard to take CEOs seriously when they talk about wages being uncompetitive but the avg CEO pay in Australia is around 70 times the average wage, close to 100 times the median wage. When no study has been able to show a link between CEO pay and out performance of the market, I do wonder why they get paid so much.

    How we get Australian management and workers to realise the ONLY way forward is to help bake a bigger pie, rather than fighting over who gets what sized slice of the current pie, we'll be in trouble. We're already in trouble since per capita GDP has been stagnant for a few years, and looks to be turning negative now.

    I'll also say that while most management seems to think it knows best, all the great ideas of thw roekrs who know the job inside out will go to waste. The Japanese have the Kaizen method of continuous improvement where no imrpovement is considered too small - the idea being a sheet of paper is not thick, but 500 is.

    How we move away from the adversarial system we currently have, I don't know, especially when the political parties still see it in their best interests to fan the fires separating capital and workers.
    A budget tells us what we canít afford, but it doesnít keep us from buying it.

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