Week 1 Careers_HRIR & Competitive Labour Markets IRE244H 2024 PDF

IRE244 LEC 5101 Fall: Labour Relations Fall 2024 Lectures on Wednesdays, 6:10pm – 9pm in BA1200 Alex Brat, Instructor Centre for Industrial Relations & Human Resources and Senior Executive Director, Labour Relations Divis...

IRE244 LEC 5101 Fall: Labour Relations Fall 2024 Lectures on Wednesdays, 6:10pm – 9pm in BA1200 Alex Brat, Instructor Centre for Industrial Relations & Human Resources and Senior Executive Director, Labour Relations Division of People Strategy, Equity & Culture, UofT Lecture 1 Intro, Careers in HR/LR & Competitive Markets 1  Lecture Format Lectures PowerPoint slides will be used to facilitate lectures and class discussions Lecture slides will be posted on Quercus following each lecture There will be approx.10 sets of lecture slides Lectures, slides, and class discussions will be most significant for the mid-term and final tests – Textbook is recommended, not required Additional research will be required for the arbitration assignment 2  Course Website The course uses the Quercus learning management engine: https://q.utoronto.ca Material posted on the course website includes: – announcements and questions, – course handouts, – Sample tests/exams, assignments from previous years, – other course information There is also a web-based course guide prepared by the CIRHR library: https://guides.library.utoronto.ca/labourrelations 3  What is IR, ER, HR & LR? Industrial Relations/ Employment Relations Study of all aspects of the employment relationship Human Resources Labour Relations Study of relations between Study of relations between Employees & Management in Labour & Management in non-union (or all) workplaces unionized workplaces 4  Diff. Meanings of ER & IR At UofT we generally use both Industrial Relations (IR) and Employment Relations (ER) to mean a broad study of the employment relationship in both union and non-union environments, but there are different interpretations: IR is often used in the narrow sense of labour- management relations at unionized workplaces ER is sometimes used in a narrow sense to refer to employment issues at non-union workplaces 5  Careers in IR/HR Jobs in HR/IR field are growing twice as fast as overall employment – Hiring, motivating, developing, and retaining the right employees is increasingly important in a knowledge based and service-oriented economy – “people are the only source of sustainable competitive advantage” – do you agree? Why? HR/IR degrees are professionally oriented – i.e., provide knowledge and skills that can be used directly on the job in the HR/IR field – Most social science degrees (e.g., economics, psychology, sociology) provide excellent skills, but the knowledge gained is less likely to be used on the job directly except by the few who get an advanced degree and become professionals in the field (i.e., economist, psychologist, sociologist) 6  Examples of people who graduated with a degree in IR Gary Bettman (ILR School Graduate, Cornell) William Lyon MacKenize King (IR U of T, 1895) Alan Krueger, B.S., Cornell University, 1983 Commissioner of National Hockey League, BA Wrote “Industry and Humanity: A Study in the School of Industrial and Labor Relations (with honors) IR, 1974 Principles Underlying Industrial Reconstruction” Chair of the White House Council of Economic in 1918 Advisers, 2011-2016 7  Examples of people who graduated with a degree in IR from U of T! Armine Yalnizyan (U of T, MIRHR 1986) Dr. Sara Slinn (PhD IR, UofT, 2002), Associate Dr. Gangaram Singh, an award-winning educator senior economist with the Canadian Centre for Dean (Research and Institutional Relations) & and administrator (PhD U of T, 1998), Provost at Associate Professor Osgoode Hall Law School National University Policy Alternatives from 2008 to 2017 8  BA in Industrial Relations and Human Resources (St. George campus) Major program: 7 full course equivalents Specialist program: 10 full course equivalents Administered by Centre for Industrial Relations and Human Resources, St. George campus (www.cirhr.utoronto.ca) The program was administered by Woodsworth College until the 2013-14 academic year ( www.wdw.utoronto.ca) In 2016-17 the name of the Employment Relations programs was changed to “Industrial Relations and Human Resources” to be consistent with the name of the Centre and the Masters and PhD programs. 9  UofT Post-Degree Certificate in HRM Administered by CIRHR (www.cirhr.utoronto.ca) Formerly (until 2013-14) administered by Woodsworth College (www.wdw.utoronto.ca) Open only to students who already have an undergraduate degree 5 full course equivalents from undergraduate ER program – IRE244H (Labour Relations) is on list of 12 half courses from which 10 must be chosen – No single course is required 10  UTM: Specialist program in HRM UTM HR/IR Specialist program: – UTM Dept of Management offers a specialist BBA undergraduate program in Human Resource Management and Industrial Relations that began admitting students in Sept 2015 – Previously at UTM there was a BA major program in HR&IR offered jointly by the Departments of Economics, Sociology and History 11  MIRHR & PhD at UofT Master of Industrial Relations and Human Resources (MIRHR) & PhD in IR and HR Administered by CIRHR (www.cirhr.utoronto.ca) MIRHR has two streams: – Two year stream OR – 12 month stream MIRHR can be full-time or part-time Fees (2017-18) approx $12,800 per year for the two year program and approx $18,500 for the 12 month program Compare to $51,500/year for 2 yr UofT MBA 12  Professional Designation: CHRP CHRP (Certified Human Resources Professional) is awarded by Human Resources Professionals Association (HRPA) www.hrpa.ca Requires nine courses (HRM, Organizational Behaviour, Accounting, T&D, Occupational H&S, Labour Relations, HR Planning, Compensation, Recruitment) plus National Knowledge Exam & work experience IRE244H satisfies the Labour Relations requirement 13  UofT School of Continuing Studies School of Continuing Studies offers non-degree programs Certificate in Human Resource Management established 2008 Nine courses, based on HRPA requirements for CHRP About $795 per course (2018), 13 classes (39 hours) Can get credit (Prior Learning Assessment) for up to two courses – IRE244H would likely qualify for Labour Relations 14  Why Study Labour Relations? Almost one-third of the working population in Canada works in a unionized environment Over 70% of the public sector is unionized Chances are you will likely be working in or dealing with people working in a unionized workplaces Even a manager working in a non-union HRM firm needs to be aware of how a union is formed and what employer response is appropriate during a union organizing drive 15  How to Study Labour Relations? The IR systems framework helps us understand how “outcomes” in labour relations arise (e.g., why does a strike occur?) The external environment, which includes the “law”, “social cultural factors”, “political factors”, and “economics” starts us off The external environment influences the main actors in the system (Unions, Government, Management) The actors make decisions, then depending on the Institutions in place (Interaction Mechanisms), the decisions will lead to outcomes (Collective Agreements, Strikes/Lockouts, Due Process) 16  The IR Systems Framework External Internal Conversion Actors Outcomes Environments Inputs Mechanisms - Union Gov’t Recognition Economic Goals and Security - Certification Political Values - Collective - Bargaining Mgmt Agreement Legal Power - Mediation / - Due Process Arbitration Social Union History - Strikes / Lockout Feedback loop to Internal / External Inputs 17  How to Study Labour Relations? An example of how the IR systems framework functions may help better understand the model: – Imagine there is a Global Pandemic in which the entire economy is effectively shut down, except essential services (i.e., a negative ‘economic shock’) – People are laid off from work and businesses shut down – Those that are working ask for at-risk-pay and want protective gear to help them work – Where unions and collective bargaining is present, unions and management meet and agree on wage increases and safety issues for workers – But where there is no union, workers could simply walk off the job or refuse to show up, e.g., for health & safety reasons – Management in non-union workplaces ask the government for help (red feedback loop arrow at bottom of diagram) 18  The Economic Environment We will begin by looking at the “economic environment” And we will start with the “competitive economic model” It may help if you have access to any basic economics textbook to review for reference, particularly supply and demand and their relationship with price/cost 19  The Economic Environment Competitive Labour Market – Refers to the basic supply and demand model – Many (perhaps most) labour markets are not competitive – But competitive model is the benchmark for comparisons – Provides the starting point for more advanced models – Ideological importance and theoretical basis for study Assumptions of the Competitive Model – “Large” number of employers – Employers are wage takers – adopt wages based on market i.e., the wage is determined by the market, not by the employer – Assumes no artificial barriers to entering an occupation 20  Supply of Labour Supply of labour refers to the number of people who want to work in any given occupation. Supply of labour depends on: – Wage rate in the occupation (total compensation) – Working conditions – Amount of training required – Preferences of employees The greater the wage rate, the more people will want to work in the occupation, other things being equal – i.e., the labour supply curve is upward sloping 21  The Labour Supply Curve W S As the wage (w) rate increases, more employees want to $15 work in the occupation. Supply $10 of labour (L) goes up L1 L2 L 22  Demand for Labour Demand for labour refers to the number of workers an employer wants to hire in any occupation. It depends on several factors, including: – Technology (alternatives) – output of the organization (“sales”) – wage rate An increase in the wage rate will reduce the amount of labour an employer wants to hire, other things being equal – i.e., the demand for labour is downward sloping 23  The Labour Demand Curve W As the wage (W) rate increases, quantity of labour demanded (L) $15 decreases $10 D L2 L1 L 24  The Equilibrium Wage Rate The equilibrium wage rate is the wage at which the supply of labour equals the demand for labour The pressure is toward the equilibrium wage in a competitive market No deficient demand unemployment at equilibrium wage but… – Frictional unemployment due to turnover time to replace – Structural unemployment due to mismatching skills, qualifications 25  Equilibrium Wage in S&D model W S Oversupply W1 E We D Le L1 L 26  Equilibrium Wage in S&D model W S Equilibrium occurs Oversupply at the intersection W1 E of the supply and We demand curves Oversupply of D labour at W1 creates downward pressure Le L1 L on wages 27  Compensating Wage Differential Application: Compensating Wage Differentials (CWD) Equalize net advantage of occupations in the long run – i.e., in competitive labour market wage difference offsets the undesirable working conditions in each occupation (for the marginal employee) Wage premium attracts employees to undesirable occupations (labour supply) Wage premium also provides incentive for employers to eliminate undesirable aspects of jobs, provided that the cost of elimination is lower than the cost of paying the CWD (labour demand) 28  CWD: The Case of the Chocolate Milk carton Q: Why does the chocolate milk at the café cost $1.00 more than corner store? $2.99 $3.99 Variety Store Café 29  Compensating Wage Differential Example: Compensating Wage Differentials (CWD) 4 major Canadian grocers give front-line workers a raise during COVID-19 pandemic Four major Canadian grocery chains brought in wage increases for employees working the cash registers and keeping the shelves stocked during the COVID-19 pandemic. Many stores announced they were limiting hours and installing Plexiglas screens, while Metro, Loblaws and Empire companies also announced they would be bumping up wages for front-line workers. Walmart Canada also announced pay increases. Link: https://www.cbc.ca/news/canada/nova-scotia/sobeys-grocery-loblaw-metro-wages-pay-raise-covid-19-1.5506935 30  Economic Efficiency Increasing economic efficiency means a change that makes some people better off and no one worse off – i.e., a “win-win” solution – “working smarter, not working harder” In general, one lesson of economic analysis is that it is more efficient to use the price mechanism to allocate resources than administrative direction – Example: Using shift differentials (incentives) instead of assigning (or requiring) workers to shifts increases efficiency 31  Application: Shift Premiums Assume initially equal number of employees working rotating day and night shift (with no shift differential) Proposition: Some employees can be made better off and no one worse off (including the employer) by using an appropriate shift premium and allowing all employees to voluntarily choose their shift (including continuing to rotate shifts) 32  Application: Shift Premiums Assume shift differential is created by increasing night wage and lowering day wage by an equal amount (so policy is cost neutral to the employer) Increase shift differential until equal (or required) numbers of employees select day and night shifts Day Shift Night Shift Differential $20 $20 $0 $19 $21 $2 $18 $22 $4 33  Application: Shift Premiums Employees who choose steady day shifts are better off because they must value the advantages of steady day shifts more than reduction in income Employees who choose steady night shifts are better off because they must value extra income more than the drawbacks of working steady night shifts No employee is worse off as they have the option of rotating shifts and their income and shift pattern remain unchanged 34  Shift Premiums as CWD: IR Issues IR barriers to implementing shift premiums as compensating differentials – Think of some reasons and write them down before you see the next slide! 35  Shift Premiums as CWD: IR Issues IR barriers to implementing shift premiums as compensating differentials – Administrative costs (costs management more to do this in time/$) – Unions often resist wage differences (solidarity principle) – But what if shifts allocated by seniority instead of rotating? Example of CAW and management at GM truck plant in Oshawa using compensating differentials to induce employees to voluntarily work a steady night shift 36  Principle of seniority in unionized workplaces In unionized workplaces the principle of seniority is very important, i.e., workers who have been employed longer (i.e., have more service/seniority) get priority over junior workers who have been hired more recently (i.e., have less service/seniority) – Seniority represents a relatively objective or “fair” way of differentiating/distinguishing among workers – e.g., if layoffs are required, the employee(s) with the least/lower seniority are the ones who are laid off first – Similarly, in assessing employees for a promotion, among the group of employees who are qualified, the employee with the most seniority will normally be promoted 37  Shift Premiums: Seniority Issue Suppose that instead of an initial situation of rotating shifts, shifts were allocated by seniority, with no shift differential. Assume that most senior EEs chose steady days and junior EEs worked steady nights and the wage is $20/hr. The shift differential used in the rotating shift case would not work because if senior EEs were faced with a lower wage to work steady days, they would be worse off, so it would not be efficient (win-win) Question: How could an efficient (win-win) solution be implemented in the seniority case?  SHIFT PREMIUMS: SENIORITY ISSUE Solution: Consider your solution before we look at a solution on the next slide 39  Shift Premiums: Seniority Issue One solution would be to give senior workers the option to trade their day shift to a junior worker, with compensation – For example, the junior EE might give up $2/hr. to the senior EE with the result that the junior EE would be receiving a lower wage on day shift and the senior EE would be receiving a higher wage on night shift This protects the seniority rights of senior EEs because they still have the right to work steady days at $20/hr. It is efficient because any junior and senior EEs who traded shifts must be better off, otherwise they wouldn’t have voluntarily traded  Economic Environment The economic environment is important as many policies affect labour relations outcomes that have, at their root, an “economic logic” or “economic cause”, i.e., money… We started with the logic of “competitive markets” but we will see in Lecture 2 that the real word of economic behaviour is rooted in imperfectly competitive markets in which big players (Amazon, Apple, Wal-Mart,) have a large degree of market power, which can be used to keep wages low and working conditions poor/cheap 41  Overview of the Text Dynamics of IR Outputs Chapter 12 Chapter 11 Public-sector Conversio Impact of issues n unionization Actors Mechanis Chapters 5–6 External Labour ms Chapters 7– Inputs Management 10 Chapters 1–4 Negotiation Labour Administratio history n Legal Conflict Economic resolution Other inputs Third-party interventions COPYRIGHT © 2021 NELSON EDUCATION LTD. 1-42