Academic journal article Journal of Economics and Economic Education Research

The Effect of Collective Bargaining on Productivity: 1947-1979

Academic journal article Journal of Economics and Economic Education Research

The Effect of Collective Bargaining on Productivity: 1947-1979

Article excerpt


Productivity measures the ratio between inputs and outputs. As productivity rises, there is more to share among all the income claimants. Thus, the worker, the employer, and the union have a huge stake in the efficiency of the economic system. It is questionable, however, whether the labor force acknowledges the relationship between productivity and income, since in the three most prosperous periods of the 20th century, average output per man hour grew less and less. During the years 1947 53, average output per man hour grew 4.1%; between 1953 66, the growth rate was 3%; and from 1966 73, it was only 2.1% (Thackray, 1978, June). There are a variety of explanations presented for this declining growth rate, which include the changes in the gender and age make up of the labor force, the lack of adequate capital spending, cutbacks in research and development outlays, and over regulation by the government. While there is no single cause for the decrease in the rate of growth, a contributing factor is the reduction in productivity resulting from the collective bargaining of union contracts.


So called "free" collective bargaining became compulsory collective bargaining during various periods in the 20th century. The union official evaluated his or her worth to the union members by gains not in production and output, but in what he or she could secure for members' use off the job, such as more money, higher pensions, earlier retirement, broader insurance coverage, more paid holidays, and vacations. Thus, when unions and management negotiated contracts, there was a difference in objectives that could be categorized into three areas of potential conflict. Bargaining disputes began over what could be labeled as security versus efficiency (Dubin, 1958). The individual tended to view his or her position as an employee as a source of income to provide for physical and social needs. Management viewed the individual as part of the production process and evaluated the employee for the work he or she contributed to the business organization. The contrast resulted in a conflict between the two sides when technology changed or when new equipment was introduced displacing workers from their jobs. Disputes also arose about job tenure, continuity of work, and work speed. It is interesting to note that the question of speed of work is now argued less and less as an issue of work fatigue and physical strain, instead becoming an issue that tends to be related to subjective standards. As an example of the dispute between labor and management concerning work speed, consider the miners. The claim of the miners for a six hour day was in response to the oversupply of miners rather than the physical labor involved (Durbin, 1958).


The second bargaining issue was a result of the diminishing significance of workmanship, meaning the skilled and capable performance of a trade (Durbin, 1958). As work was specialized through the breakdown of jobs into smaller and smaller units, greater efficiency in production resulted but brought along with it a separation of workers from the final products they produced. Job breakdown was also achieved by job dilution, which was the reduction in the amount of skill necessary to perform a job by breaking it down into its component parts. As a consequence of work specialization and job breakdown, the individual worker had no incentive to improve beyond the minimum standards set for quality and quantity of output. The job was reduced to merely a way to earn a living. Thus, unions placed an emphasis on the significance of income. When labor costs, which directly or indirectly accounted for 75% of the cost of all products, increased with no corresponding rise in productivity, the union member disregarded the importance of efficiency in the economic system (Schmidt, 1973). The union's income objective was closely related to security, but during a recession the two were not always compatible. …

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