Question

Doesn't the hiring of contracts reduce the value of the union workers? Why doesn't the union train more union workers...why isn't management prepared for these situations.  

Answer 1

The world has become a global village. Hiring of contracts mainly is concerned with outsourcing activities or getting temporary workers to undertake a particular job in the Company without making them be on the Company’s payroll. Outsourcing helps to concentrate on the core activities while delegating the non-critical activities to a third-party so that efficiency in the system is maintained at a lower input cost for the same. Hence, if the labor costs at overseas are low, it is natural for the Companies to consider outsource their manufacturing activities in order to avail the cost-advantage and offer goods at a more competitive price to the consumers. Outsourcing therefore helps in curbing with the labor costs and it is to be also noted that when the costs are higher, there may arise a weakness in competitiveness of the Country as a whole. One avails the services of the Outsourced agencies and pay the agencies the required fees. It is a mutual give and take process. For the Outsourced company, it could the availing of its consultancy fees. Therefore, considering the cost of in-house training and the line of activities, a Company undertakes, often, hiring of contracts become easier and more affordable and hence management is prepared to face these situations in a more logical manner.

On the other side, in terms of Unions, Union, is anyway on decline in the Economy for various reasons. The American economy has evolved from highly unionized manufacturing units to lesser unionized services sector. There has been a vast diversity observed in the work culture that resists the idea of collective bargaining which is an essential point of any successful union. Hence this does not encourage the Unionization. In addition, Unions are further declining, due the concept of Globalization where the manufacturing activities, in which the unionization was most prominent, itself is getting outsourced to various other countries and to the southern and western regions of the US where unionization is not very prevalent. Since the collective system of worker representation has taken the place of individual system of employee representation, the future of union further reinforce the employee's aversion to join the unions. Therefore, even if the Union trans more union workers, the value of unions would still reduce.