The Role of Collective Bargaining in the Workforce

There are various ways in which a transnational corporation can choose to orchestrate their business in the countries they operate in, which can seriously affect the relationships established with global union federations as well as the reputation of a company. The operational structure a company employs is crucial to their success as many factors such as location, employees, labor, wages and cost all need to be considered in this decision. Further comparison of the type of relationships firms choose to make with the countries they operate in and the effects it has on the company will be discussed in greater detail. The relative effectiveness of the type of business strategy transnational companies can implement is a very important aspect of doing business internationally.

An international business practice widely used in operation are international framework agreements. These agreements are commonly used between a home country of a company and a host country where the company operates. A home country is simply the domestic state of the country that owns and operates an international corporation abroad and a host country is one in which the corporation itself is located and orchestrated. More specifically, this agreement is usually negotiated between a multinational enterprise and a global union federation (Michel, 2007). The purpose is to create a relationship between the parties involved and to ensure that the company of the home country respects and adheres to the same standards in all of the countries it operates in. The transnational company would establish this agreement, typically with a global union federation where the negotiation of wages and other conditions of employment would be set.

An international framework agreement is typically paired with voluntary codes of conduct. Voluntary codes of conduct can be adopted at an industry-wide level or at the level of individual corporations (Hsieh 2006). Voluntary codes of conduct are becoming an increasingly important aspect in which multinational corporations conduct business. Essentially, this specifies the provisions to be taken by a corporation, if a conflict should arise between the corporation and the employees or society overseas where business is conducted. This is an ethical standard being widely used to establish and uphold employee rights and labor regulations of the countries where business occurs. Accountability between corporations and laborers is one of the main issues codes of conduct intend to address in order to provide an ethical standard while harnessing a productive and efficient workplace.

Collective bargaining is another business practice used in the line of international business between employees and employers. It is usually carried out between corporations and unions representing their employees. Similarly to international framework agreements, contracts are negotiated upon and terms of employment are outlined. These ways differ as through collective bargaining, issues that employees feel need attention can be addressed in a timely and appropriate manner than through other agreements of laborers' rights. The employees’ union almost indemnifies them as an entity to protect their rights as laborers. Changes are made more swiftly when presented by the union compared to framework agreements as more drastic action can be taken by employees belonging to a union if they feel their rights are being threatened (Buhmann 2006). A Union allows a group of laborers to be represented as a collective whole body, strengthening their power and voice.

The implementation and enforcement of worker’s rights have vastly increased and certainly become a more prevalent issue within international businesses. Unfortunately, the rising need for protecting workers can be contributed to some major errors within the transnational corporation sector (Buhmann 2006). Neglecting the rights of workers previously throughout history has made for a dire need to regulate international corporations to ensure labor rights are upheld to a better standard. The Rana Plaza Disaster in the Dhaka District, Bangladesh in 2013 was a disdainful tragedy that took the lives of approximately 1,100 people (Nittle 2018). This tragic event could have been prevented if the right labor laws were implemented and regulated. Employees of the Rana Plaza building had noticed alarming cracks in the walls of their workplace a few days prior to the collapse, and nothing had been done. Disturbingly enough, workers were told they had to continue coming to work and threatened with the loss of a month’s salary if they failed to comply (Nittle 2018). An eight story building collapse in a garment building of many leading retailers in the industry, and the deaths of over a thousand people is what it took for significant reform to come to laborers of this profession and the industry in similar geographical locations.

A lack of accountability and contractual agreements ensuring the safety, wellness and equality of labor rights was deemed the largest factor in the tragedy (Compa, L. 2008). Neither the owner of the building, nor the retailers that buy their garments from Rana Plaza had a legal obligation to protect the workers (Compa, L. 2008). This is where voluntary codes of conduct fall short as there is more than just one culprit responsible, however, it is difficult to have all of the responsible parties take accountability, such as brands that purchase the goods, because there is no legal obligation. Once this was made public, serious reform came into action. A legally binding agreement called the Accord on Fire and Building Safety in Bangladesh was signed by unions and brands less than a month after the collapse. The International Labor Organization has elaborated on what exactly the agreement has done for laborers in Bangladesh, “In addition to the Accord’s primary focus on fire, electrical and structural safety, they also train worker safety committees, ensure workers have the right to refuse unsafe work without fear of retaliation, and respond directly to worker complaints. The Accord has helped workers remediate issues with factory owners ranging from retaliation for union activity to sexual harassment and violence at work.” (International Labor Organization 2014). This began ensuring that a legal framework agreement was imposed and upheld terms of collective bargaining for workers in Bangladesh.

Though, improvements in labor standards were made and an emphasis on corporate social responsibility has been targeted on transnational and multinational corporations, a Special Representative for International Labor Affairs at the U.S. Department of State, Sarah Fox, explains that this agreement is only a small step in the right direction, “The difference with the Bangladesh Accord is that it’s binding. With all there is left to be done in Bangladesh, we should not forget this is no small thing that has been accomplished.” (International Labor Organization 2014). Fox’s point emulates that corporations need to continue to improve the working standards in this industry and now not only have a legal obligation but also a moral obligation to continue doing so. The Rana Plaza Disaster illustrates a Legal Framework Agreement by unions and brands, however the collective bargaining power of the union should more directly voice concerns of laborers. Collective bargaining will allow workers to express their complaints without fear of retaliation and now have the power to retaliate should the terms of the legal framework agreement not be upheld (Compa, L. 2008).

Collective bargaining provides the foundation for a transparent supply chain. Systematic changes are essential in order to ensure all levels of production in an industry are upheld, and empowered to challenge transnational corporation when problems do arise. When Collective bargaining is emplaced, it prevents TNC’s from taking advantage of their production lines. In 2014, Nike, Adidas and Timberland came under fire by the Yue Yuen Facility in China, where 48,000 workers assembled a strike over wages and job security (Cheng 2014). The worker’s voices became so powerful after drawing international attention that worker’s began overpowering their unions and speaking out directly, adding that they wanted contracts imposed with stricter regulations and penalties for unions complying with worker’s needs (CHENG 2014). This strike changed labor movement in China by “encouraging and empowering thousands of other workers to take militant action and demand collective bargaining with management.” (Cheng 2014).

Collective bargaining is what gives workers a voice and hold TNC’s and MNC’s accountable for providing safe working conditions, fair treatment and pay, as well as crucial benefits workers rely on employers to provide. Collective bargaining also allows workers to express their concerns when expectations fall short of what their employers should be doing. International framework agreements and voluntary codes of conduct only work as far as to what the public eye can see (Buhmann 2006). These methods do not hold corporations to the level of responsibility they need to be upholding and make it too tempting for corporations to only worry about their workers as far as their public image is concerned. Through the implementation of collective bargaining, these TNC’s and MNC’s image will now be subject to scrutiny by the public eye if they do not uphold a sustainable and effective work standard as corporate social responsibility continues to grow.