Unions: What are they good for?

Unions have served their purpose and unfortunately are now a major hindrance to the World economy. The speed or lack there of, at which our over-staffed bureaucracies proceed has deterred a huge number of corporate decision-makers. Salaries and benefits are not the only sources of discontent among international corporations established in Western nations. The power that is wielded by many of these unscrupulous teamsters is enough to scare any prospective business from deciding to begin production. It seems, unfortunately, that although we apparently operate in a somewhat market economy; business is no longer able to be the master of its own destiny.

The power wielded by labour worldwide is astounding. Unionization in any country will result in a further downsizing. Perhaps even most governments have learned a basic economic lesson: a service sector must be driven by a productive manufacturing economy. The answer is quite simple, if we as entrepreneurially focused economy are able not encourage the growth of production in this country; we will never be able to support our life-styles. Just as many addicts support their habits by stealing, The Western economies have done the same under the guise of “deficit financing”.

Unions are one of our key tumors in this cancerous economy. The increased costs of labour will make it more expensive to produce goods than almost anywhere else except a third world nation. Let us bear in mind that the cost of labour also includes the extremely expensive and resource-consuming costs associated with labour grievances. Employees are encouraged by their unions to file such complaints, many times simply in order to justify the union’s existence. The more active the union remains in the employees eyes, the more easy it becomes to justify the amount of union dues paid to support increased legal actions against the employer (interestingly enough many government branches operate in a similar manner). This type of adversarial association between employer and employee results in hundreds of lost people hours and an unhappy work environment that results in an unproductive and disgruntled work force.

One of the longest standing arguments against unions is that they prevent the company from being properly managed. Many managers within unionized organizations are demoted to the task of simple administration. Employers of unionized firms are mummified in bureaucratic tape and lose sight of what managing is all about. Collective agreements are designed to tie the hands of business; they limit flexibility.

In an era where market responsiveness is crucial to competitiveness and survival, unions add an abundant load for companies to carry through any proposed change to structure. A company that is able to maintain amicable employee relationships and incentive programs without the need for unions, which is the way of the present, can turn the company on a dime like a finely tuned North American sports car. Unionized behemoths are able to change direction more like large and bulky freight ships. By the time they have made the adjustments necessary to compete, the rest of the pack has a considerable advantage. People scratch their heads and ask why our Western economies are UN-competitive?

Even employees within unions lose the true benefits offered by many large companies. As the size of the beast increases a union member’s chance to move forward within the company decreases. Because of employee job classifications within unionized collective agreements, employers are, in many cases, unable to remove workers from their work environments to broaden their experiences in other areas. Good employees are the losers and bad ones are the winners. How does one distinguish between the two?

Those employees that are able to learn, adapt, and produce more quickly and efficiently than others simply deserve more of what the company has to offer. Unions, however, view advancement on a seniority basis. Although seniority advancement seems like a noble gesture, business is no place for nobility. The merit principle should be the first element studied in any consideration of advancement, not the only one, but the first. Seniority-based advancement breeds apathy in workers and apathy is the most difficult disease to cure in the workforce. One cannot be forced to enjoy their work but little can be done in terms of dismissal, which is next to impossible with the current power of unions. Once apathy spreads, it spreads like the plague.

Unions increase costs for all involved. Employer costs increase in administrative, legal and production costs, which cost companies contracts. Contracts mean jobs and fewer jobs increase the burden of government support and the levels of unemployment and so goes the vicious cycle of economic disaster. Employers know, in this day and age, what it takes to attract and retain good hard working quality employees. There is a growing movement away from the oppression of union employment from many disenchanted members. The headaches associated with being a member of one have become apparent while the benefits have become less so.

Union inability to effect positive, negative or any change in recent market troughs has increased the level of union member dissatisfaction and could eventually spell the end of an archaic social phenomenon. Global trends toward self-determination and individualist market-oriented economies have forced many to rethink their position in society. The Western nations must do the same.

Real wealth is only created from our ability to commercialize and develop new and exportable technologies, creates jobs and allows the government to foster those socially necessary programs. The rearranging, manipulating, and accumulation of capital does not provide us with any new taxable income and this is what creates a healthy economy.

No one is suggesting that we eliminate all our coveted benefits, however, maintaining the degree of luxury to which we have become accustomed is impossible. As Worlds we must realize that we are part of a global economy. No matter how protectionist we become, eventually we must turn to international markets to obtain many technological resources that have been patented or that are unavailable. Unions have been oblivious to the facts. World economies are in a disastrous economic state. Cries of “More! More! More!” must humbly turn into apologies asking for forgiveness. If the Western economies is to survive the next decade and create a national turnaround; it must begin to focus on those areas where we are woefully inadequate.

Our needs are a more highly skilled workforce that are worried less with petitioning government to cradle many of their outdated positions and more with their re-education and re-training to be more effective and productive employees. Industry requires these employees and must be freed from the constraints imposed by unions.

Unions are not about change. They are about keeping the status quo indefinitely while industry around the world is sprinting passed us by leaps and bounds and we continue to trudge along burdened with the dealings of organized trouble.
As Western counties we must make our position known that we desperately want to be a competitive country. The inability to adequately attract investors without concocting some incredibly generous package that our debt-laden government backs with capital they do not have, is a direct result of high labour costs. The argument that our high standards of living created the problem is inaccurate. We have fostered an attitude that more services for less work are a viable practice in daily life. Well, someone has to pay for these services. Unions, backed by hundreds of thousands of dollars, are fighting for increased salaries and additional benefits that will eventually come from the workers in tax revenues. The time to end this shuffling of capital is now.
Unions are a roadblock to change. Those who adapt survive. Those who cannot die a thousand deaths.

By: Mark Borkowski is president of Toronto based Mercantile Mergers & Acquisitions Corporation. Mercantile is a brokerages that specializes in the sale and purchase of mid market companies. He can be contacted at mark@mercantilema.com or www.mercantilemergersacquisitions.com