Economic Issues

1
Chapter 13

• Economic Issues

2
Wage Determination

• Industrial differences
• Degree of competition decreased pattern
  bargaining due to global competition and
  deregulation
• Value added by employees
• Labor costs as percentage of total costs - labor
  intensiveness

3
Wage determination (cont.)

• Occupational wage differentials
• Evaluating jobs within the organization through
  job analysis to provide job descriptions (job
  tasks and duties) and job specifications
  (knowledge, skills and abilities)
• unions prefer wage scales because job evaluations
  may limit bargaining
• wage surveys of external labor markets

4
Incentives

• Wage incentive plans to increase productivity and
  reward employees
• Profit sharing - unions may gain too much control
  and drain resources
• Group incentive plans or gain-sharing
• Scanlon
• all production employees participate
• suggestions chosen by committee of employees
• based on productivity

5
Incentives (cont.)

• Group incentive plans/gain sharing (cont.)
• Rucker plans
• idea coordinator named by management
• bonuses based on value added by direct labor, not
  necessarily just productivity
• Impro-share - bonuses received based on
  production in less than standard amount of time
• Skill-based pay - learn new skills
• Two-tier pay systems - new emp. paid less

6
Issues

• Ability to pay
• Standard of living
• cost-of-living adjustments (COLA)-purchasing
  power remains the same
• improving quality of life
• Comparable worth - value of jobs held primarily
  by women are lower than those held by men

7
Wage adjustments during contract period

• Deferred wage increases
• Cost of living (see previous issues)
• Wage reopener clause permits renegotiation at
  specified time or event/condition
• Lump-sum adjustments - may be in addition to
  other pay increases but no impact on hourly wage
  rate

8
Benefits

• Insurance
• Health cost containment issues - fee for service
  vs. HMOs vs. preferred providers
• Income maintenance such as severance pay or
  supplemental unemployment benefit plan
  work-sharing to avoid layoffs
• Premium pay for shift differentials, OT, etc.

9
Benefits (cont.)

• Payment for nonwork vacations, holidays
• Pensions - defined benefit vs. defined
  contributions and vesting
• Family and childcare benefits - Family Medical
  and Leave Act
• Prepaid legal services
• Employee assistance plan
• Tuition aid
• Employee stock ownership plan (ESOP)???