The Public Sector strikes - a re-run of the General Strike? Lessons that won’t be learned …

I said all of this over a year ago, in March and April 2010, before the lunatic ConLib Coalition got their hands on the levers of power and did more to alienate the trades unions than Maggie Thatcher did in a similar time frame. At least Maggie knew what she was about - this lot don’t, anymore than the feeble and contradictory Labour Opposition does.

In the unlikely event that anyone in this benighted UK government reads this, they will completely ignore it. I offer it to those who want to take time to understand what lies before us, in the hope that Scotland can avoid the worst of it, and demonstrate the common sense - and humanity - that is now possible from our government since the SNP decisive win on May 5th 2011.

EMPLOYEE RELATIONS, GOVERNMENT, EMPLOYERS AND UNIONS

QUOTE

“One of the eternal conflicts out of which life is made up is that between the efforts of every man to get the most he can for his services, and that of society, disguised under the name of capital, to get his services for the least possible return.

“Combination on the one side is patent and powerful. Combination on the other is the necessary and desirable counterpart, if the battle is to be carried on in a fair and equal way.

“The fact that the immediate object of the act by which the benefit to the unionised workers is to be gained is to injure the employer does not necessarily make it unlawful, any more than when a great house lowers the price of goods for the purpose and with the effect of driving a smaller antagonist from the business."

Justice Oliver Wendell Holmes – 1896

A dissenting judgement in the case of Vegelahn versus Guntner, an 1896 labour law decision from the Supreme Judicial Court of Massachusetts.

Although it took several years to make its full impact, this dissenting judgement was a seminal one in determining the course of American labour relations and collective bargaining in the 20th century, and its influence was felt throughout the industrialised world.

Its central argument carries the same force today, as we approach a series of public sector strikes that may involve the largest number of workers since the General Strike, and may only be the start of something even bigger.

Americans are much more realistic about labour relations, sometimes brutally so, but after a century or more, attitudes in Britain remain naive and ill-informed, and the reaction of government and media commentators to strikes is remarkably consistent, and raises the question – Why are the unions always the bad guys?

Why won't Government and companies learn these lessons?
Keep your lip zipped in public comment through the media when there is a chance of averting the dispute. A strike threat is a negotiating tactic - until the workers actually hit the street. It is a way to stiffen a negotiating position against an otherwise all-powerful management negotiating team.

Some hard facts -

ONE

Employers, both private sector and Government, don’t recognise trades unions unless they are compelled to do so – by law, by union muscle, or in very rare instances, because they are driven by some other ethical or strategic judgement.

Recognising a trade union for any purpose, from representing employees for grievance and disciplinary purposes up to full-scale recognition for collective bargaining on terms and conditions, implies a restriction of the employer’s freedom to act, and this is not a freedom that any employer should surrender lightly.

Unions, especially craft unions, have very ancient roots in the medieval guilds, however, the main impetus to the organisation of labour in trades unions came from the industrial revolution.

The entire history of trade unionism has been a struggle to secure representation rights against the hostility of employers to granting such rights, and that struggle has often been a violent one, especially in the United States of America in the 19th and early 20th century, notably in the automotive industry and mining industries. Lest anyone in the 21st century think that violence was always initiated by the trades unions, the most extreme examples of violence, often lethal violence, have come from the employers. (Henry Ford and Andrew Carnegie had particularly bloody records in attempts to suppress trades unions.)

The law has played a strange part in this, tending to see-saw between granting rights then reversing the judgement in a later court. But the overall direction in the Western world has been towards granting legal right to trades unions and their members to organise, to represent, to bargain, and vitally, to withdraw their labour by striking. The greatest legal restrictions on trades unions were imposed in the 1980s by Margaret Thatcher, and their two greatest defeats were in the newspaper industry by Rupert Murdoch and the mining industry by Margaret Thatcher

TWO

Once an employer or government department has granted full representation and collective bargaining right to a trade union it becomes very difficult to end that relationship - to de-unionise – without major conflict and disruption.

There have been relatively few examples in Britain of full frontal de-unionisation – union busting, to give it its pejorative term – but probably quite a few where union recognition has withered on the vine because it wasn’t strongly rooted in the first place.

Why would an employer want to end the relationship with a trade union?

The answer almost always relates to a pressing need to achieve changed working practices and reduce the paybill in times of recession or in the face of severe competition. Quite simply, the management’s right to manage the business and react to market conditions is being unacceptably constrained by their inability to negotiate change with employee representatives.

This was Maggie’s dilemma – to achieve her change objectives for British society, employers had to be able to successfully negotiate change with their workers. If they couldn’t, because of what they defined as union intransigence, then government would stiffen their backbones by legislation and by example, e.g. in the coal industry, and if the unions went on strike except after following due process, they could be sued.

From the union perspective, the failure to negotiate change lay with the employers and the negotiating stance they adopted. Unions are there to protect the jobs and the terms and conditions of their members, and their instinct is to resist any change that threatens these things, but unions can and do accept the need for change and have negotiated change – quite radical change – when they are convinced of the rationale for that change and have recognised that the alternatives to it are even more unacceptable - for example, failure and closure of the business.

THREE

When there is a failure to negotiate a vital change agenda with a trade union, the roots of that failure can usually be traced to the nature of the management/union relationship over many years, and serious deficiencies in the company’s employee relations practices.

I have worked with a very wide range of U.K. and international companies and organisations over the years, both as a employee relations specialist and as a consultant.

Most of those organisations have successfully negotiated the change agendas demanded by the exigencies of the business, the marketplace and technological change, and the successful ones, with negligible exceptions, always displayed certain positive behaviours in their relationship with their employees and their representatives. The ones that failed tended to consistently display certain negative behaviours.

1. In successful companies, directors, managers and supervisors at all levels accepted the legitimacy of the trade union’s role and functions and respected them, not just because they were required to comply with the law, but because they had freely entered into an agreement with the union, and were bound to honour that agreement.

2. Successful companies, whilst accepting the representational and negotiating role of trade union representatives, both internal (e.g. shop stewards) and external (full-time officers of the union), insisted on management’s direct relationship with employees and their absolute right to communicate with them directly. The managers did not channel vital communications through union representatives to employees, e.g. “Tell your members this …” but “We will be telling our employees and your members this …”

For example, the best companies - in terms of employee relations communications – would give trade union representatives an advance briefing on important relevant matters, and would then brief employees in groups with the union representatives present, would answer questions, then would turn the meeting over to the trade union representative and leave to permit them to address their members in private.

Under no circumstances would the company knowingly permit or offer facilities to the the union that resulted in employees hearing an important management message from their union representative before they had heard it from a company representative.

This principle – of management’s absolute right to communicate directly with their employees – was constantly emphasised and practised, and the company would sustain a strike rather than breach it. It rested upon the legal fact that the contractual relationship existed between the company and each individual employee, and the recognition that the union was not the agent of the employee in that contract but their spokesperson. The nature of collective bargaining often creates strange apparent anomalies in relation to this principle, but unless there is absolute clarity on it it, trouble inevitable follows.

In my experience, companies who hit major difficulties in negotiating change agendas had been breaching this principle for years, effectively abdicating their right to communicate directly with their employees, and were now reaping the whirlwind.

The ironic fact of the matter also tended to be that the companies that clearly were unhappy with unions and did not, in their heart of hearts, accept their legitimacy were also the companies that had abdicated their right to communicate with their own workers.

3. Successful companies never cried wolf about change agendas – they told their employees the truth at all times. The companies that had failed to communicate the seriousness and critical nature of the current economic pressures driving the urgent need for change had been crying wolf for years, in situations that were not critical, simply as a negotiating tactic, one that was profoundly misconceived . Consequently, they were not believed when the real threat came along.

4. Successful companies had a strong human resource function, represented at board level, and understood and fully accepted the role of HR. The companies that failed (in my experience) were invariably deeply ambivalent about their human resource functions, failed to understand their role and often impeded their ability to discharge it. They also tended to blame the human resource function when things went wrong. In the worst cases, managers at all levels regarded the HR function with either resentment or contempt. Managers in unsuccessful companies were strong on blaming behaviour and weak at accepting responsibility for their policies and their actions.

5. Successful companies, while always willing to offer negotiating concessions to reach agreement, never compromised core principles, and were willing to sustain strikes to protect them. Unsuccessful companies had a long track record of caving in to pressure expediently, usually after a failure to compromise when valid concessions were possible.

6. Successful companies understood the nature of trade union democracy, hierarchy and communications procedures. Unsuccessful companies drew false parallels with their own management hierarchical, non-democratic structures, and could never understand that a trade union is an inverted pyramid, with all the bosses at the top – its members – and their subordinates – the shop stewards and full-time officers at the bottom.

THE NATURE OF THE RELATIONSHIP

It is vital that the directors and managers of a company or governmental organisation clearly understand the nature of their relationship with the trade union and its representatives. Most  would say that of course they do, but scratch the surface, and crucial misconceptions become evident in many companies.

A fully recognised trade union, that is to say, one recognised for grievance representation and collective bargaining on terms and conditions is not the agent of the employee at contract – each employee of an organisation has an individual contract with the employer, and the union representatives, in negotiating on behalf of employees who are also union members simply reflects the collective wishes of those employees.

An agreement on terms and conditions with union representatives therefore must be expressed in each individual contract of employment and accepted or rejected by each employee.

In practice, employees who are union members express their acceptance or rejection of the offer in mass meetings or by union ballot, and the minority, for or against, usually bows to the will of the majority as expressed by the vote.

(Complex legal situation can arise from this contractual relationship in collective bargaining situations - I have been part of them on several occasions – but it is beyond the scope of this blog to examine them in detail.)

The union is not a contractor for the supply of labour to the company, and therefore should have no role in the recruitment, selection, assignment of duties, overtime etc. of employees. Difficulties nonetheless can arise in all of these areas with unions, and in the specification and qualifications of candidates for posts within the company.

The above is a general statement of good practice, but historically, in the United States of America, the UK and elsewhere, unions have had - and probably still have - a voice in, and sometimes control of these areas.

(For example, in many industries in the USA, all labour was recruited through the Union Hall, i.e. the union HQ. This was true of parts of the rubber industry in Akron, Ohio, to my personal knowledge, up to the 1970s and perhaps beyond.)

In the newspaper and printing industry in the UK, the Fathers of the Chapels (shop stewards of the print union branches) controlled recruitment, entry qualifications, allocation of overtime and many other aspects that should properly be management’s prerogative until the great watershed of Wapping and their crushing defeat by Rupert Murdoch.

A central concept in good management is the company’s right to manage, that is to decide what is in the best interests of the company, its customers and its shareholders, indeed, it is better expressed as a duty to manage.

But that right is qualified by realities in every aspect of a company’s operations – the law limits it, it is limited by the nature of its supply chains, its distribution networks, by its customers, by its shareholders, by public opinion to some degree, and by the relationship it has entered into with a trade union or trades unions. The company cannot do as it pleases, although it must seek the maximum freedom of decision making within the constraints imposed.

For example, the management of a company must change working practices when required to by the business environment or the need to innovate, and such changes can change the duties of existing employees and may result in a need for fewer employees, i.e. redundancy. But the company is bound by the law of contract to either negotiate these changes with employees, or, if it unilaterally applies them, to face potential problems under employment law with individuals or groups.

That situation applies whether the company has a recognised a trade union or not, and a union’s role in these situations is to represent the employees, individually and collectively in matters relating to their contracts of employment, which will include elements that were collectively negotiated and agreed by the union.

Unions were formed principally to deal with inequality in that contractual relationship between powerful, monolithic, essentially amoral employers and vulnerable individual employees. Before the existence of trades unions, employers in many cases – perhaps most - rode roughshod over the employees contractual and legal rights – which were initially very limited. We return to Oliver Wendell Holmes and his seminal judgement that I quoted in Part One and Part Two of this blog topic.

THE PUBLIC SECTOR

Unions and employers in the public sector negotiate in a significantly different context to those in the private sector, and the dynamics of their bargaining and the implications of withdrawal of labour by striking reflect this difference. It is beyond the scope of this blog to examine that in detail, although certain aspects of it will be covered later. Suffice it to say that the nature of the work and the services of public sector workers makes a breakdown in relationships damaging to society in a fundamental way, and strikes in the public sector in vital services tend to impact on the widest range of the general public.

WHAT HAPPENS WHEN AGREEMENT CANNOT BE REACHED?

Changes in working practices for existing employees fall broadly into two types – those that are expressly or implicitly covered by the existing contract of employment and those that clearly involve a change to the contract.

(It should be noted that what constitutes the contract of employment is not always clear, and it may have to be determined by a legal judgement. All employees are required by law to have a written statement of their main terms of employment after a specified period, but in itself, this is not the contract of employment, and many other aspects of employment may be relevant to the contract.)

If, for example, a contract of employment explicitly contains a requirement for employees to be mobile in terms of their normal place of work, a change to the normal place of work would be required of an employee, and refusal to accept the move would be a breach of contract by the employee.

On the other hand, if no mobility or flexibility on the place of work was in the contract, a unilateral change to the place of work by the employer would constitute the offer of a new contract of employment, and the employee would be free to reject the offer. What follows from such a rejection can be complex, and issues surrounding alternatives, compensation, redundancy, selection for redundancy etc. are raised by the change.

What is clear is that the employer has the right to make such a change, and if other avenues of consultation and negotiation fail, to terminate to employee and hire someone else.

Most conflicts over change agendas by companies arise over such situations, whether they relate to place of work, duties performed, pay and other remuneration elements, qualifications, and to the deadlines for implementation of the changes. Such conflicts always have a legal dimension – the contractual dimension – but they play out the drama as a power confrontation if trades unions are involved.

WHAT HAPPENS WHEN TALK HAS FAILED?

A hard-nosed management might well approach change by simply announcing it, then implementing it. They might well get away with this in a non-unionised company, or one where union organisation is weak. Leaving aside the obvious impact on human relations and morale in the company, not to mention cooperation with the changes, the main risk of such an approach is of a legal challenge from one or more employees.

But for the majority of employers, this would be a last resort, after many other communications approaches and conflict resolution methods had been exhausted.

What are these methods?

The first approach by the management of a company is briefing the employees and their representatives of the nature of the planned changes and the timescale for implementation.

Briefing would usually be accompanied by a question and answer session to provide clarity on the detail of the changes. If in addition the reaction of the employees and their representatives is also sought, which is good practice, then this is described as consultation – eliciting views on the acceptability of the changes and listening to alternatives presented by the workforce and their representatives.

(Requirements are placed on companies by employment law in relation to change agendas, and these must complied with.)

If management accept the alternatives  presented by the employees and their representatives, then agreement can usually be speedily reached. (Alternatives can range from outright rejection of any change to modifications to the changes and the implementation timescale, and compensation issues for acceptance of change.)

If management reject some or all of the alternatives presented, then their options are to either implement unilaterally or negotiate. In a unionised company, negotiation may be required by previous agreements, and again there may be legal implications.

So we see the potential sequence of the process -

Brief

Consult

Implement or negotiate

Negotiate

NEGOTIATION AND DEADLOCK

All negotiation takes place against the possibility of failure to reach agreement. In most commercial negotiation – buying and selling of goods and services – failure to reach agreement results in abandonment of the negotiation by both parties – the walk-away – and the search for a new agreement with different participants. The company seeks another supplier, the salesperson seeks another customer.

Employer/employee negotiations take place in a different context, one that I call the locked relationship, where the parties to the negotiation cannot easily seek other partners. In theory, the employer can terminate the contracts of the entire workforce and re-hire, and each employee can resign and seek a new employer. The inherent inequality in these possibilities is what gave birth to trades unions. The employers call it a free market for labour – for the employees, it used to be freedom to starve. We’re back again to Justice Wendell Holmes.

Some employers have taken the extreme route, and it has worked for them, e.g. Rupert Murdoch. His success was undoubtedly aided by the British publics distaste for the prints unions of the time – their PR was disastrous, little sympathy was extended to them, and Murdoch became a kind of industrial hero.

(My personal view is that it had to happen, and if it hadn’t been Rupert Murdoch it would have been someone else. But my distaste for Murdoch and his print empire far exceeds any negative feelings that I had for the print union chapels and fathers of the chapel and their featherbedding and restrictive practices.)

Almost all negotiations experience one or more periods of deadlock, when one or more negotiating items cannot be resolved, and neither party is prepared to move. Deadlock, if unresolved, leads ultimately to breakdown of the negotiations, but deadlock must never be confused with breakdown, and when it is, premature and needless breakdown can occur.

Deadlock is simply a negotiation that is becalmed – motionless in the sea of discussion, compromise and concession. It usually indicates that the parties, for the moment, have exhausted their capacity to move, to concede, to modify.

But significantly, deadlock can be a negotiating tactic, when one or both parties actually have the capacity to modify their position but are testing the resolve of the other party. Deadlock can be a form of brinkmanship and may be a bluff, albeit brinkmanship and bluff with risks attached.

(John F. Kennedy called Nikita Khrushchev's bluff in the Cuban Missile crisis. Khrushchev backed down – his bluff was therefore called. Was Kennedy bluffing? Thank God we’ll never know …)

In a commercial negotiation, deadlock implies a walk-away from the table permanently – breakdown. But in a locked relationship between management and union, what is threatened by deadlock and breakdown? Almost certainly not a permanent walk-away, but a temporary breakdown, one that will hurt both parties to the negotiation.

That temporary walk-away is called a strike, and sometimes a lock-out. It is designed to hurt – a power play – but it is also designed to end in an agreement.

THE NATURE OF DEADLOCK AND BREAKDOWN IN A CHANGE AGENDA NEGOTIATION

Management initiates the change agenda, attempts to justify it by the business need arguments available to it, and sets out its planned timescale. If the change agenda has no negative implications for employees, then all that is required is to ensure understanding, co-operation – then implement. But change agendas almost always do have significant negative consequences for employees, and it is their trade union’s job to prevent or at least ameliorate the impact of the changes.

The critical element in the employee and union response is lies in the answer to the $64,000 question – do they believe the company when they state the rationale for change and the consequences of not accepting it?

Faced with a clear-cut, convincing case that the alternative to accepting change is closure or radical contraction of the company’s activities, unions are rarely obstructive. But if the argument is weak, or simply not believed, or the negative impact of co-operating with the change seems as bad as the alternative, then the union will fight the change.

The power balance in the negotiation is then as follows – the company has the power to implement unilaterally and the union has the power to strike. It has always been thus, and no one looking at the history of industrial relations should be surprised at this stark reality.

The underlying dynamic of that reality is that unions have a vested interest in delaying unacceptable changes indefinitely by protracting negotiations and management have a vested interest in bringing the negotiations to a close by implementing on a deadline. When negotiation is exhausted, the parties have reached the point of freedom to act, in negotiating parlance.

(An analogy is diplomacy designed to avert conflict between nations. When the talking stops, there is an act that provokes war.)

So why are the unions always cast as the bad guys in this old, old game?

Well, let me offer a little parable -

A man is locked in a cupboard, and it goes on fire. Outside the door is another man with the key, and the man inside demands that the cupboard be opened. The man outside refuse to unlock the door, but carries on talking. The man inside, threatened by the smoke and flames, finds an axe and smashes down the door. The man outside remarks to observers that the man wielding the axe is a destructive bastard – why couldn’t they have kept on talking?

This can be interpreted in two ways, and dependent on your political view of trades unions, you can cast the roles either way, but reflect on these points – talking cannot continue indefinitely and at a certain point, action, however destructive, is preferable to inaction.

There must be an alternative to force, you cry! Yes, there is, or rather, there are several alternatives. They have been available in various forms throughout the entire history of employer/employee disputes.

The first is to deny one of the parties any rights at all to resist and/or compel change under law, backed by force. This was the model for many generations before more liberal labour laws began to be enacted.

The second is to involve a third party, acceptable to both of the disputing parties to mediate, that is, help the parties resolves their differences by advice, bringing clarity to the issues, and removing the heat from the dispute.

The third is non-binding arbitration, an extension of the mediation role, where a third party considers both argument and gives a ruling, which nevertheless does not bind the parties to acceptance.

The fourth is legally binding arbitration by a third party. The disputing parties have in effect surrendered their freedom to decide to the arbiter.

For several decades now, we have had in the UK a body that specialises in these roles, and which is backed up by legislation. It is called ACAS – the Advisory, Conciliation and Arbitration Service. (It has been alleged that it was to be called the Joint Advisory, Conciliation and Arbitration Service until some prescient soul realised what that particular pronounceable acronym came up with …)

Although it advises, mediates and conciliates, strictly speaking it doesn’t arbitrate – it appoint arbiters (or arbitrators, if you prefer).

Why in hell don’t management and unions go to arbitration in major disputes? You may well ask …

Well, sometimes they do, but often only after a lot of blood has been shed by both the warring parties. It would seem sensible that, in our vital industries and services at least, that legally binding arbitration should be the norm rather than the exception, but perhaps stopping short of a legal compulsion to arbitrate.

Why don’t they do it?

The answer seems to be that they want to retain their ultimate right, be they employer or trade union, to choose their battlegrounds and fight their wars at their own discretion, rather like countries going to war without the approval of the United Nations.

Now, who would be stupid enough to do that?

STRIKES AND LABOUR DISPUTES
I spent most of my employed working life dealing as an industrial relations specialist with trades unions, and a large part of my consulting practice - from the late 1980s up to about 2004 - related to industrial relations and the training of directors and managers in negotiating skills and collective bargaining on terms and conditions and change agendas, including analysing the dynamics of employer/trade union disputes and their escalation from deadlock through strike threats to strikes or other forms of industrial action, e.g. working to rule, sit-ins.

I was a staff union member (ASSET and ACTSS) for brief periods in my early career, and I was a staff representative and was once on strike for recognition of a staff union against my American employer of the time, Goodyear. (I was in the Personnel department at the time!)

So I can reasonably claim some expertise on these matters.

There are a few golden rules and principles for dealing with escalating crises in labour relations negotiations, and for actual strikes.

1. A strike threat is not a strike, even when it is accompanied by a ballot for strike action and a deadline for its commencement – it is a bargaining tactic.

2. A strike is an action of last resort for a responsible union, when all other avenues for agreement seem to be exhausted, just as is unilateral implementation of change by management.

3. An offer made and rejected is an offer that is off the table, e.g. if one party makes an offer, and it is rejected and followed by a strike, the party that rejected the offer cannot regard it as still extant while a strike threat is extant or after a strike ends without agreement. It can only be a reference point in recommenced negotiations.

For example, if management makes an offer that is rejected, the union cannot claim that it is still on the table after the rejection unless management chooses to regard it as such. Conversely, if the union offers a settlement and it is rejected by management, the same applies.

4. During the lead-up to a strike, i.e. before employees actually hit the street, both management and union should embargo any comments to the press, other than the most anodyne, e.g. “we are still hopeful of a settlement and negotiations are continuing.” Negative comments, attacking the intransigence and sheer bloody mindedness of the other party are particularly damaging.

5. The interests of the media during crisis periods in negotiation are not those of either of the parties to the negotiation – media commentators are usually simplistic in analysis, and deficient in understanding of the most basic facts of negotiating dynamics, politically biased, and their reporting is aimed at sensationalising the impending conflict.

It can be argued that the media brought down the Heath Government in early 1974 by wilfully misunderstanding – if not misrepresenting – the nature of the miners’ union opening demand, one that they never remotely expected to achieve. Heath was fool enough to believe the media, rather than the experienced managers dealing with the negotiations. The figures on the costs of settlement were also deeply flawed.

6. A strike is created by two parties, not one. It takes two to tango – a deadlock is never one-sided. One party is refusing to meet the other party’s terms – both create the deadlock and the ultimate breakdown.  Experienced negotiators and mature organisations accept this reality.

Does that mean that both parties’ demands are justified? Not necessarily, but if one party lacks realism – or compassion, or values –it is the job of the other to get them to see reason by dialogue. If they fail in this, then the strike, providing it is legal, must be accepted as the necessary cost of bringing about a more balanced view. So it is in conflict between nations, even though the conflict may destroy both sides. (The UK is now prepared to talk turkey to the Taliban after a decade of war. You don’t make peace with your friends.)

7. Once the strike commences, the gloves are off – in comment terms, in media publicity, in exerting legal pressures on the other side, etc. but during this period of the strike, a critical consideration must be - what terms will be necessary to secure a return to work, and how can open channels of communication be maintained?