economic, social, and political environments chapter 3 © 2012 nelson education ltd

Economic, Social, and Political Environments

Chapter 3

© 2012 Nelson Education Ltd.

Copyright © 2012 Nelson Education Ltd.

Learning Objectives

At the end of this chapter, you will be able to discuss: supply of and demand for labour

elasticity of supply and demand and its impact on labour power

impact of free trade, deregulation, and privatization on unions

importance of work-leisure decisions

institutional and noncompetitive factors that affect labour supply

3-2


Learning Objectives

At the end of this chapter, you will be able to discuss: recent demographic changes in the labour force

social conditions of the labour market

public attitude toward unions in North America

current trends in income distribution and poverty

impact of compositional shifts in the labour market on labour

importance of achieving a work-life balance

the structural elements of the political system that help labour

globalization and politics

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Economic Policy

© 2012 Nelson Education Ltd.

3-4

Macroeconomic policy single most important influence on industrial relations

Deregulation designed to create more competition by allowing

prices to be determined by market forces North American Free Trade Agreement (NAFTA)

free trade agreement between Canada, the United States, and Mexico

Privatization transfer or contracting out of services to private sector

3-5

The Great Recession 2008 triggered by worst financial collapse since the Great

Depression low or negative growth, high unemployment

Canadian Government Action Plan (2009) Stimulate spending Home construction Infrastructure Business and communities Financial systems

Economic Context


Almost all industries have been affected: Deregulation Privatization North American Free Trade Agreement

3-6

Annual Rate of Employment, Select Countries

Economic Context


Nonunion firms labour market forces determine employee

compensation and conditions Elasticity of supply (demand)

labour responsiveness of supply (demand) caused by a change in the wage rate.

Supply curve is elastic a small increase in wages causes a large

increase in supply of labour

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The Labour Market: Supply & Demand


Labour Market Equilibrium3-8


Shape of the demand curve is important Influences union’s ability to raise wages

without significantly affecting employment levels

wage-employment tradeoff The more competitive the product

market greater the employment impact of a wage

increase greater the elasticity of demand for labour

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Labour Power andMarshall’s Conditions


Substitution effect the easier it is to substitute capital for labour,

the less power labour will have to raise wages Labour intensity

degree to which labour costs account for production costs

The more competitive the market for substitute factors of production greater bargaining power of firms

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Labour Power and Marshall’s Conditions


Demand is more elastic and unions will have more power when: product markets are less competitive harder to substitute labour for capital labour costs are small proportion of total

costs market for substitutes is less competitive

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Labour Power & Marshall’s Conditions


3-12

Unions also derive power from sources other than labour markets.

Unions have successfully forged alliances with community groups to: Assist in organizing new members Strengthen positions in bargaining Support political lobbying campaigns Oppose plant closures Support strikes and other industrial actions

Labour Power & Marshall’s Conditions


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Number of workers is a function of: Population and immigration Work-leisure and work-family decisions Career patterns and retirement choices Labour mobility

Noncompetitive Factors Monopsony

firm is sole market buyer of a good, service, or labour


Supply of Labour

Institutional Barriers to Supply Lack of government resources resulting in a

lack of supply of graduates in a certain profession training or higher education

Unions and Labour Supply Hiring Hall

union-run centre refers union labour to job sites as requested by firms

Demographic factors are important determinants of labour force patterns

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Supply of Labour

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Public attitudes to unions Work attitudes Trends in income distribution and poverty


Social Conditions

3-16

Apparent Contradictions

See Table 3.4, View of Work, 1996 (% of employed workers), textbook, page 89

Despite the general support for unions, workers displayed very positive attitudes toward work and conditions

majority of Canadian and American workers want unions for reasons other than economics or job dissatisfaction

Poverty rising

Union decline linked to wage inequality

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Work-Life Balance

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Aging population Impact of Compositional Changes on

Unions: More Women Occupational Shifts Contingent Workers

Part-time Temporary Flextime Compressed workweek Teleworking


Social Conditions

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Labour & Employment Relations Challenges Work-life balance Fundamental restructuring from

manufacturing to service-based economy Demographic changes

dual-earner single-parent families aging workforce baby-boomer effects


Social Conditions

Work-Life Balance3-20


Compared to the U.S., Canadian labour movement has maintained union density More, and labour-friendly, laws in Canada Parliamentary system of government Political support for labour from political

parties

3-21


Political Environment

Three important social and historic experiences for Canada-U.S. difference: 1982 Canadian Charter protected individual

rights but facilitated collective bargaining American firms in Canada more restricted in

anti-union activities Canada rejected the U.S. right to work

approach

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Political Environment

Globalization pressures governments to conform to international policy norms less policy space for provincial governments to

experiment with reforms.

3-23


Globalization & Politics

Building on legal context of Chapter 2 Economic context

great recession poverty

Supply and demand for labour elasticity Marshall’s conditions

Social and demographic factors, Canada vs U.S.

Political differences, globalization

3-24


Summary

economic, social, and political environments chapter 3 © 2012 nelson education ltd

Documents

nelson education

power labour

labour supply3

labour importance

labour market equilibrium3

labour costs account

labour marketpublic

labour forcesocial conditions