Economic recession has a generally negative effect on the union’s bargaining power. Recession reduces union’s bargaining. There are a number of reasons why this is the case. One of them is the reduced membership. Unions are made of workers. However, during recession, many people lose their jobs (Gourevitch et al., 2016). This automatically terminates their membership. The number of members that a union has is equivalent to its bargaining power. A union which has a high number of members has a higher bargaining power since if the union calls for a strike, many companies will be affected.
Another reason why recession reduces the bargaining power of unions is the availability of cheap labor in the market. During recession, many people are laid off and this creates a surplus of labor in the market. This provides employees with an advantage since they can easily take advantage of the desperation among many people to have a job (Lange, Ross & Vannicelli, 2016). For example, in 2010, workers at Mott’s apple and juice sauce factory belonging to Dr. Pepper-Snapple Company called for a strike to protest against the reduced wages which had been implemented earlier. However, following the 2008 recession, many individuals were unemployed. The company thereby hired non-unionized temporary workers to work in the factory at wages which were half of what was being paid to the striking workers. This made the strike meaningless and the union had to reduce its stance so that the workers can be reinstated.
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Generally, recession reduces the bargaining power of unions since there are no enough members that can help the union to exert its demands. In addition, the high labor supply in the market makes it hard for unions to make demands.
References
Gourevitch, P., Markovits, A., Ross, G., Bornstein, S., & Allen, C. (2016). Unions and Economic Crisis: Britain, West Germany and Sweden . London: Routledge.
Lange, P., Ross, G., & Vannicelli, M. (2016). Unions, change and crisis: French and Italian union strategy and the political economy, 1945-1980 . London: Routledge.
