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« Ozodi Osuji Lectures #28: Introduction to Organizational Behavior | Main | Ozodi Osuji Lectures #30: Introduction to Customer Care and E-Commerce »

November 09, 2005

Ozodi Osuji Lectures #29: Introduction to Labor Relations

by Ozodi Thomas Osuji (Seatle, Washington) --- In the work force are two types of people, the owners of business (and their agents called professional managers) and the workers.

Management represents the owners of capital. The working stiff is used by management to accomplish the organization’s goal of making profits for the owners of capital. In Marxist terms, the bourgeoisie owns the means of production (capital, labor). But labor does not consider itself owned by the Bourgeoisie. Labor sees its self as an independent class of workers, selling their skills and being paid well for them.

Management and labor see things from different light. Management sees labor as a means to an end, to producing goods and services in the most efficient manner. Management wants to make profits for the organization’s owners. To management, labor is not different from capital, but is means to an end. Management, in fact, would replace labor and use impersonal equipment, such as robots, to do its work, for people are too messy and demand too much psychological attention. As Max Weber would say, labor ought to be machinery, like a factory operated as a means of production and not complain about being misused.

Alas workers are human beings and have feelings and must complain about the quality of their relationship with their employers.

When the industrial revolution began in England, around 1746, and laborers were gathered to work in emergent factories, they were subjected to inhumane working conditions. They were often worked sixteen hours a day. They were paid very little. They were not even making enough moneys to support their families.

Talking about families, sometimes the workers families were laboring along side them. Women and children, as young as twelve years old, worked in mines and factories and worked twelve hour days and died young.

It was the poor working conditions that set the early utopian socialists like Charles Fourier, Joseph Proudhon, Robert Owen etc talking about the need to organize labor and prevent their exploitation. Later in the 19th century, Karl Marx and others entered the fray and hijacked the budding movement to improve the conditions of labor and began talking globally about how the proletariat ought to rise up and take over the means of production.

Marx and later V.I. Lenin, in fact, came to a point where they did not respect the ability of labor to know what is good for it. Left to themselves, Lenin believed that labor could only rise to trade union consciousness, where they struggled for the improvement of their working life. That was not good enough. What was needed, as Lenin saw it, was for elite that understands the exploitation of society by the rich to engage in a revolution on behalf of ignorant laborers. The party vanguard was to take over the governance of society and create an equal society on earth.

The Bolshevik party, the communist party is to act as a vanguard and take over society and create a communist society where no one exploited any one else. Trade union consciousness is not good enough, moreover, in his book, Imperialism, Lenin pointed out how Western imperialists went to other parts of the world and exploited their labor and used their wealth to bribe labor in the imperial country and made it acquiesce to its own oppression.

American capitalists, for example, went to Latin America and paid the peons there pennies to work in their plantations and made tons of profits. They brought the profits that they made overseas home and used that money to improve the living condition of American labor. Thus, it came to pass that an American factory worker in Detroit who literally cannot write his name is paid so much money that he lives like the aristocrats of yesteryears. He drives a pink Cadillac and no longer feels oppressed by the owners of capital. He lives in a house, has all the modern amenities of living and cannot possibly see him self as oppressed. He aligns himself with his oppressor and both of them then oppress non Americans.

Nike builds a shoe factory in India and worked children, some as young as ten years old, twelve hours a day and paid then a few rupees. It brings the shoes those oppressed children made and sold them in America. American workers are given opportunity to live decent lives and no longer see themselves as oppressed by the owners of capital like Nike. That is, labor is bought by the owners of capital.

Communists, therefore, did not like the emerging trade unions of the late 19th century, for they saw them as in cahoots with the owners of capital.

In the meantime, labor unions emerged. These unions emerged to look after the interest of labor, within the employment situation. They agitated for improved working conditions for labor. Where the owners of capital would like to work labor until it drops dead, unions wanted them to improve labors working condition, perhaps, reduce work time to eight hours and pay labor living wages.

The owners of capital naturally resented labor unions. In the United States, the owners of capital formed an unholy alliance with the political sector and used the police to harass labor unions. The law outlawed unions and arrested those who organized for the improvement of labor. Those who called for strikes and industrial shutdowns were seen as the enemies of the state, arrested and prosecuted. Nevertheless, the struggle continued. Mr. Dale Bumpers and his followers in the emerging trade union movement kept risking police harassment until eventually they were permitted to form unions legally.

Franklyn Delano Roosevelt came to power in 1933. He borrowed quite a bit from the views of communists, as well as the views of John Maynard Keynes and embarked on what he called New Deal. Here, he tried to use the power of the state to correct known capitalist cycles of boom and burst, inflation and depression (via taxation policy, monetary policy, fiscal policy etc) and using public spending to help reduce unemployment. Working with Congress, he enacted the Wagner Act that, for the first time, established the relationships between labor and management. First, the Act made labor unions legal. Now labor is allowed to organize in the work force and reach agreements with its employers on working conditions. It set the eight hour work day and forty hour work week. Other Acts of Congress and regulations by OSHA required improved working conditions for labor.

Labor unions are now legal in most parts of the world. Essentially, these are organizations of labor demanding improved wages and working conditions from the owners of industry. Those who sell their labor for a living want to be treated decently on the job.

In advanced bourgeois society, the owners of capital are seldom in the work place. The millions of share holders of IBM, AT&T, and General Motors etc are not at the worksite. Instead, the owners of capital (stock holders) hire professional managers to help them run their businesses. Thus, the Board of Directors hire a president and chief executive officer to run their business, who, in turn, hires a management team: vice presidents etc and those help him work for the owners of capital and make profits for them.

Labor then no longer deals directly with the owners of capital but with their surrogates, the management team. Labor must now negotiate with management for improved working conditions.

Whereas in the past labor had to deal with Mr. Ford of Ford motors in Detroit, it now must deal with the professional management team that runs that company.

Management wants to make profits for the owners of capital. Labor wants improved working conditions and good pay. Too good a pay means sharing all the profit made by the company.

If all the profit of a company is given to labor, in improved pay, it follows that the owners of capital would not make any profit, no dividend, and no capital gains. If the owners of capital do not make handsome profit, they would withdraw their capital and the company would go under.

It is yet to be seen if labor can manage companies. Cooperates are generally small scale affairs.

The salient point is that there is always tension between management and labor. This is so because they have different goals. Management wants profits for the owners of capital and labor wants to take that money and run. Therefore, both sides are at a loggerhead.

The process of forming labor unions in the work place has been streamlined. According to labor laws, labor is authorized to form labor unions. The process is very simple. If workers feel that they are not well treated by management they organize and call on the appropriate authorities from the ministry of labor to come in and hold an election at their work place. In the USA, this outfit is called the National Labor Relations Board. They come in and hold election and if a majority of the workers vote for union, they are authorized to form a union. Management, generally, does not like unions and in most cases would do everything in its power to prevent unionization, as Wal-Mart is allegedly doing in Canada, as I write.

The union meets and elects its officers, president, secretary, shop representatives etc and the leaders of the union call on management to negotiate a contract with them. The contract is to specify their working conditions on paper. This would mean that management is no longer free to hire and fire and pay workers as it chooses or promote whomever it wants; now it has to go by such things as seniority, which according to management translates to mediocrity.

As already observed, management resists labor unions for where labor is organized the work place becomes like a government bureaucracy and from then on it takes ten workers to do what one worker ought to be doing. Thus there is a struggle between management and labor. But, intimately, they write a contract based on the demands of labor and what management thinks that it could live with and still make profits for the owners of capital.


Sometimes the process of writing contracts is protracted and often breaks down as the two sides are unable to agree. At that stage both sides may opt to hire a mediator to mediate their difference.


If mediation fails they may obtain an arbitrator from the government who then helps to write a contract that he thinks is fair to all concerned. Both sides must accept the resultant contract. But before they reach arbitration they negotiate long and hard.


Sometimes, labor exercises its option of going on strike. Or it engages in work slow downs where it throws the books on management. (If you really followed procedures and rules nothing would get done in the work place.)


Labor’s contract with management specify such things as wages for positions, how people are hired and fired, and working conditions, whether benefits like health insurance are given, and Pension plans. And others. The most annoying stipulation in these contracts is the issue of seniority. Labor wants folks to be promoted on the bases of how long they have been on the job. But management knows that longevity is not correlated with knowledge and expertise.

I went into an industry and was promoted to the top position within five years, whereas there were people who had worked there for over thirty years. Dedication and expertise ought to count for something. But labor does not see it that way. It wants what it calls fairness, to elevate senior people to top paying positions. Well, senior people might be dead wood and would drag the business under.

Ultimately, a contract is drawn and during its duration (say three to five years) all agree to abide by its terms. Both management and labor agree to be guided by its terms. If an employee feels unfairly treated by his supervisors, he talks to his union representative and the rep goes to bat for him or her. He talks to the supervisor and tries to straighten ruffled feathers.

Grievance procedures are followed and the problem is resolved. In unionized situations, it is generally difficult to fire labor. The work situation becomes like a government bureaucracy where it might take years to let go an unproductive worker. In the meantime, the unproductive worker is paid and this contributes to inefficiency in the allocation of the businesses resources.

Labor unions are of many kinds. There are industrial unions that encompass those in a certain industry (say those working in certain industry, such as those working for auto producers) and trade unions encompassing those who belong to the same trade such as the American Medical Association, a trade union of American doctors looking after doctors interests. (The AMA is a powerful interest group, it largely worked to Kill Bill and Hilary Clinton’s attempt to give every American medical insurance; it works to reduce admissions to medical schools, so as to control the supply of labor/doctors hence increase the price demand pays for medical services…like my esteemed guide, Milton Friedman, I am against all unions that make it difficult to enter certain professions; let universities admit all qualified medical students and produce tons of medical doctors and therefore let the cost of doctors go down; I see no reason why a medical doctor, who essentially is a technician with limited education should earn more than a truly educated person, a physicist or micro biologist.)

We shall not dwell on the specifics of labor unions for this paper is not meant for professional mangers or trade unionists but is meant to give the general public some idea of what labor unions are and what they do.

We can talk about the various forms of strikes, boycotts, works slow downs, scabs and so on, but that is not going to do us any good. What the reader needs to know is that workers are allowed by law to organize and work out a contract with management for improved working conditions. He also needs to know that the desire of workers must be matched with the desire for business to make profits. If all profits are given to labor then management disappears. There is no evidence that labor can manage industries. I can tell you from experience that there is a difference between labor and management.

The average Joe Blow worker goes to work and puts in his eight hours shift and goes home. Management often works sixteen hour days, and sometimes even on weekends. Management is working and thinking about work for twenty four hours, trying to make the business make profit and survive. Believe me; management deserves the big bucks it makes.

It takes good ideas to make businesses work. It takes risk taking to make businesses work. Labor seldom has good ideas. A manager may stay up all night doing what needs to be done and yet work eight or more hours during the day and not expect additional remunerations. If labor puts in on extra hour of work, it demands over time pay and, if not paid, cries to the entire world that it is exploited. Well, some of us regularly work fourteen hour days and are not paid for our extra efforts and do not make noise about it. You are reading this piece as my free gift to you. I stayed up at night to write it and still work during the day. No one paid me for doing this. I did it because I think that it needs to be done, that we need to share information and perchance enable Nigerians to start governing themselves well. This is called leadership and managerial behavior.

A leader sees a problem and tries to solve it and not ask what is in it for him. Labor asks what is in it for it. There is a distinction between labor and management. I would promote to management the chap willing to dedicate his life to hard work, to work at least twelve hour work days and I do not care what his age is. I could care less if a chap is fifty years old if he is not dedicated and hard working I would not even hire him in the first place. I am a task oriented manager and would fire you in a second if you do not do what you were hired to do.


All of us need to understand a bit about labor unions, how they came into being and what they exist to do. We all have to learn to coexist with labor unions.

There are exploitative owners of capital and their surrogates, management, so in some situations we really need labor unions, although we must not have them everywhere, for they tend to generate inefficiency, For example, I think that academic departments are generally inefficient. If I had my choice, I would make all political scientists go take management courses, up to MBA level. This way, they can teach future politicians how to manage the state rather than merely teach scholastic political science. True, we need to know what Plato, Aristotle, Machiavelli, Hobbes, Locke, Montesquieu, etc said about politics and teach them to students, but we also need to teach students the practical art of managing the state, management. My wish is not going to happen for the various unions of university teachers would not permit such an innovation to occur. Political scientists keep teaching students the old scholastic political science that guarantees unemployment for them.

Labor unions are here to stay with us and we must understand them. A course or two in industrial relations is a must for all managers and, in my opinion, for all politicians.

Ozodi Thomas Osuji

November 10, 2005

Posted by Administrator at November 9, 2005 01:59 PM


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