Question

What are the advantages and potential disadvantages of using sector-wide contracts to establish pay in an entire industry?

Answer 1

Sector - wide Contracts :-

Sector wide contracts aims to establish a pay scale for the employees in an industry on the basis of the employment standard of that particular industry. As per this agreement an employment - based bargaining will be made keeping in mind the set standards of the industry. This contract will consider more than one agreements with a single employer or more than one employer pertaining to the same industry.

• This contract helps the employees to negotiate for such agreements to get the minimum standard pay of the industry.
• It also helps the employees to negotiate with the employer for improving the terms and conditions on the basis of single employer agreements with more than one employer.
• If the above two factors are not fulfilled by the corresponding employer, then some other independent arbitration body who will take a final decision regarding the same.

Advantages of Sector wide contracts for Employees :-

1. Fair payment for the employees will alter the lifestyle of the employees and their families and even the society in a large level.
2. Negotiation process arising in an industry helps the employees to make more fair negotiation with their employers.

Advantages of Sector wide contracts for Business :-

Some employers cannot pay higher wages even if they are willing to. This is because, other competitors may start reducing their employee wages and offering goods with cheaper price. This may affect the company paying higher wages. Sector wide contracts enable the employers to pay a fair wage to the employees by all the related firms in an entire industry.

Disadvantages of Sector wide contracts :-

There are not much disadvantages, only some misconceptions.

1. The entire industry may go on strike.
2. Certain small employers may not be comfortable to pay a fixed wage to their employees as large companies pay.