No more free lunch for Unions

First Published: 2005-05-15

Responding to the Nassau Institute e-newsletter of March 26th a friend of the Institute postulates that the relationship of Unions and the government is the cause of the problems between Unions and employers.

"There is nothing wrong with the concept of Unions in a free market society. It is Government support of Unions that is a problem. That is, it is not Unions, it is Government regulation."

"Modern Unions are counter productive for workers and employers alike, but their corruption is made possible by Government regulation; just as in some cases, organized crime is an outgrowth of the regulation of products and activities."

Unions promise votes to politicians sympathetic to Union demands. Through this relationship the Unions are able to exert monopolistic power in the labour markets.

Our correspondent describes how it works:

The Government requires both business owners and workers to accept Unions under certain conditions, and for owners to deal in "good faith" or face fines and restrictions. In practise, "good faith" means compliance with the demands of Union bosses and government bureaucrats.

The Agency Shop is an example of monopoly power. It is a collective agreement that requires employers to deduct a fee from the wages of non-union workers, who, in theory, share the benefits of the Union's bargaining efforts. Nevertheless, the non-union employee is forced to pay for something not of his own choosing.

If the political electorate were serious about "fairness" they would consider implementing the following suggestions:

1. Ban Management Unions. Management teams owe allegiance to owners and shareholders. They are given access to confidential and proprietary information of the company. Their privileged position is compromised if they are required to vote on a strike or a walkout.

2. Establishing a Union by non-management employees requires a majority vote. Signed affidavits to confirm the voting record should be lodged with the Minister of Labour.

3. Collective Agreements should be limited to a term of three years. Six months prior to the expiry of a Collective Agreement, a vote by secret ballot should be taken to confirm that a majority is still in favour of a Union.

4. If a vote to renew a Collective Agreement is not held prior to the expiration date, the Agreement is automatically cancelled. The Union then can re-institute procedures to obtain a new Collective Agreement.

5. Individuals cannot be forced to enter into agreements against their will. They are thereby not obligated to pay Union dues.

6. Consultation time with government to be equally divided between employers and unions. Television and radio time on government media to be equally divided between union and employer and/or non-union individuals.

7. Equal representation for all members requires prohibiting contributions of union funds to any political party.

8. Annual Statements by independent auditors to be circulated to all contributors and employers.

9. Independent audits of mutual aid, pension and other funds should to be circulated to contributors.

10. Unions made responsible for collecting membership fees, not employers.

11. Laws governing protests must be respected and enforced.

12 Demonstrations on private property without permission of property owners violate property rights and laws protecting private property must be enforced.

13. Disputes must be registered with the Department of Labour for 14 days before any strike or work to rule action.

14. Wildcat strikes are illegal and therefore strikers are responsible for damages consequential to their illegal action.

The Bahamas government is the largest employer of unionized labour. Government employees are treated differently than employees in the private sector. This creates a double standard, mocking the Constitutional principle of equality before the law.

Henry Hazlitt, author of Economics in One Lesson, comments on government support of Unions:

"…They continue to pass laws granting special privileges and immunities to labor unions; to oblige workers to become members; to tolerate mass picketing and other forms of coercion; and to compel employers to "bargain collectively in good faith" with such unions – i.e., to make at least some concessions to their demands. The intention of all these measures is to "help labor." But the result is once more to create and prolong unemployment, and to lower total wage payments compared with what they might have been."

"Who Protects the Worker?"

In their wonderful treatise on the market titled Free To Choose, A Personal Statement Milton and Rose Friedman wrote the following:

"When unions get higher wages for their members by restricting entry into an occupation, those higher wages are at the expense of other workers who find their opportunities reduced. When government pays its employees higher wages, those higher wages are at the expense of the taxpayer. But when workers get higher wages and better working conditions through the free market, when they get raises by firms competing with one another for the best workers, by workers competing with one another for the best jobs, those higher wages are at nobody's expense. They can only come from higher productivity, greater capital investment, more widely diffused skills. The whole pie is bigger – there's more for the worker, but there's also more for the employer, the investor, the consumer and even the tax collector."

"That's the way the free market system distributes the fruits of economic progress among all the people. That's the secret of the enormous improvement in the conditions of the working person over the past two centuries."

Laws written to fulfil the demands of particular groups – whether they are employer or employee groups breach the constitutional protection of equality before the law. When employer and employee cannot agree to a mutually beneficial contract either must be free to look elsewhere to fill their needs.

But maybe this is all wishful thinking and politics will trump logic every time?

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