1. UNIT C ECONOMIC FOUNDATIONS AND FINANCING
5.03 Understand categories, advantages, and disadvantages of specialized and organized labor.

2. Specialization of labor
The concentration of workers on specific individual tasks involved in the production process; making the best use of resources in the production of goods and services.

3. Division of labor
The specialization of the functions and roles involved in production; a single worker or a few workers are each assigned a specific role.
Important to mass production
Closely related to the standardization of production, the introduction and perfection of machinery, and the development of large-scale industry
Underlying principle of free trade as advocated by Adam Smith

4. Division of labor (cont.)
Adam Smith’s classic example of division of labor is the pin-making process. Ten men, each performing one or more of the 18 operations necessary to make a pin, together produce 48,000 pins a day. Working separately, they could not make 200 a day.

5. Specialization of labor by trade or profession
Specialization is based on the type of work performed in order to make a living.
Most common type of specialization

6. U.S. Department of Labor categories of trades/professions
Professional, technical, and managerial
Clerical and sales
Service
Agricultural, fishery, forestry, and related
Processing
Machine trade
Bench work
Structural work
Miscellaneous

7. Specialization of labor by stage of production
Occurs when more than one stage of production is needed to convert a raw material into a finished product

8. Specialization of labor by task
Occurs when jobs are so specialized that a worker does only one small part of the total job
Also referred to as division of labor

9. Advantages of specialization and division of labor
Simplified worker training
Increased employee interest and satisfaction
Increased production rates
Increased level of skill
Increased quality of work
Ease of transferring to a similar job

10. Disadvantages of specialization and division of labor
Increased interdependency
Increased boredom on the job
Decreased pride in work
Decreased morale and enthusiasm for the job
Increased chance of obsolescence due to technological advances
High degree of specialization may cause difficulty transferring or obtaining another job.

11. Ways of combating the disadvantages of specialization and division of labor
Job enlargement
Give workers additional tasks at the same level of skill and responsibility in order to keep workers from getting bored.
Job rotation
Rotate employees periodically so that they are able to learn new job tasks and see how their old tasks relate to the new tasks.

12. Ways of combating the disadvantages of specialization and division of labor (cont.)
Job enrichment
Add interest and satisfaction to a task
Allow workers to make more decisions, set their own pace, or supervise employees
Job satisfaction
Use employee suggestions
Flexible or alternative work schedules
Give praise for work well done
Cash incentives
Contests
Bonuses

13. Labor union objectives and tactics
Labor union: A group of workers joined together for a common purpose.
The major objective is to improve the terms and conditions under which employees work.
Increased wages
Increased benefits
Improved working conditions
Protection of job security
Fair treatment of members by management

14. Labor union objectives and tactics (cont.)
Tactics used to achieve objectives
Bargaining with management for favorable labor contracts
Representing union members in disagreements with management regarding employment conditions and practices
Labor contract: An agreement that spells out conditions for wages, benefits, work hours, job security, working conditions, and grievance procedures.

15. The organization of labor unions
Industrial labor unions
Comprised of workers within the same industry
Most members work in factories where products such as cars, clothing, and steel are made.
To become eligible to join an industrial union, new workers must successfully complete a probationary period and then become permanently employed by the company.
Regular members are entitled to bid for positions within a company as positions become available.
Promotion is based on seniority and qualifications.

16. The organization of labor unions (cont.)
Craft/trade unions
Comprised of workers with a particular skill
Membership is based on the degree of skill and years of experience.
Apprentice
Journeyman
Master

17. The organization of labor unions (cont.)
Considerations when deciding to join or not join a union
The union’s accomplishments
The size of the workplace
The cost of union membership
Once a worker joins a union, he/she must abide by union rules and follow specific procedures for getting problems solved.

18. Types of union representation
Closed shop
Employees must belong to a union before they are hired.
Illegal under the Labor Management Relations Act

19. Types of union representation
Union shop
Employees must join the union as a condition of employment.
Preferred by unions
Illegal in states with Right-to-work Laws (NC)
Right-to-work Law: Law that gives employees the right to decide for themselves whether or not to join or financially support a union.
Workers employed in the railway or airline industries are not protected by a Right-to-work Law.

20. Types of union representation (cont.)
Agency shop
All employees are required to pay union dues, but do not have to join the union.
A union represents all employees regardless of union membership.
Preferred by unions if union shops are illegal
Dues may be donated to charity.
The first agency shop was established at the Ford Motor Company plant in Ontario, Canada, in 1946.

21. Types of union representation (cont.)
Open shop
Employees are not required to join the union.
Preferred by management
Opposed by most unions
Required by law in Right-to-work states

22. Significant issues confronting labor and management
Wages
Number one issue
Unions seek higher wages.
Management seeks to reduce labor costs.
Job security
Seniority ratings
Protection from layoffs
Rules for discharging employees
Grievance procedures
Discipline procedures

23. Significant issues confronting labor and management (cont.)
Working hours
Workers want a reduced work week.
Flex time
Fringe benefits
Paid vacations
Sick leave
Pension plans
Insurance
Working conditions
Safety
Physical surroundings
Working conditions have a significant effect on morale.

24. Significant issues confronting labor and management (cont.)
Union security
Recognition of union as official bargaining agent
Negotiating power

25. Labor negotiations
Collective bargaining: The negotiation process union officials and company representatives go through to determine the terms and working conditions for employees.

26. Collective bargaining process
Prepare.
Conduct bargaining sessions.
Marks the beginning of official negotiations
A mediator or arbitrator may be called in if an agreement cannot be reached.
Reach tentative agreement.
Vote to ratify or to reject the contract. If contract is rejected, renegotiation is required.
Settle the contract.
Signed by union and management
Usually lasts one to three years

27. Union negotiation strategies
Strikes
Members stop working.
May force management to meet demands
Picketing
Positioning union members near company entrances
Members carry signs and/or chant slogans.
The goal is to publicize labor/management conflicts.

28. Union negotiation strategies (cont.)
Boycotts
Union members try to get people not to buy a business’s products.
May cause significant losses for the company
Featherbedding
The union requires more employees to be hired than are actually needed to complete the job.
Union members may reduce their productivity level so much that the company may be forced to pay overtime or hire new employees.

29. Management negotiation strategies
Primary goals of management when dealing with unions
Increasing worker productivity and control labor costs
Maintaining control over decisions on how work is done and on how assignments are made to complete that work

30. Management negotiation strategies (cont.)
Actions taken by management when negotiations are not successful
Lockout: Temporary work stoppage in which employees are not allowed to enter the business.
Injunction: Court order that forbids workers to participate in acts such as pickets and strikes.
Strikebreakers: New non-union workers hired by management to replace those on strike.

31. The importance of the union-management relationship
Many businesses have never had a union strike, and a company thrives when managers and union workers are able to work closely together.
When there is constant conflict between unions and management, everyone suffers.
Employees lose jobs.
Production decreases.
Businesses close.

32. The importance of the union-management relationship (cont.)
Labor and management must work together to provide opportunities for education and retraining in order for employees and businesses to remain competitive.