The Bargaining Power of Labour Unions

The Bargaining Power of Labour Unions
The Bargaining Power of Labour Unions

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Multinationals Greatly Diminish The Bargaining Power of Labour Unions

It is true that Multinational diminish the bargaining power of labour unions; since, the vertical integration has led to an increased exposure of the multinational towards lowering the bargaining power in most labour unions. Multinational firms have taken the responsibility of weakening the labour union power due to the perception that the more power the labour union has, the larger the incentives that will rise towards outsourcing the capital intensity of the firms (McIlroy, 2000).

The multinational firms have readily available resources, which they can use to absorb any losses in any of their branches located in a country in conflict with a national union. Through doing this, the multinational will be diminishing the power to bargain with most labour unions as the multinational will feel lesser impact due to its continued recording of profits in various worldwide operations. A form of explicit policy can be taken by various multinational firms across the globe towards reducing the company’s vulnerability to any strike that might be initiated by a given national trade.

In such a case, the bargaining power of the labour union will be diminished (Van Offeren, 2011). Multinational firms mostly use the branch closure strategy in diminishing the bargaining power of labour unions whereby; the multinational firms can temporarily move its production through the use of production facilities from other countries and if need be, the firms can cause closure of installation in a given country. Through doing that, the bargaining power of labour unions will be diminished.

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In addition, multinational firms can make decisions from their remote headquarters without involving the labour unions and the inability of the trade unions to influence the decision made their bargaining powers are bound to get diminished. The multinational firms can exert pressure on the government to adopt laws in their favour to imply that they highly voice the government as compared to the labour unions (Van Offeren, 2011).

Decisions made by the government in favour of multinational firms give them enough capability to diminish the bargaining power of labour unions. Multinational firms use many strategies in determining any syndicate to any competitive negotiation to imply that they are above the labour union and can easily diminish its bargaining powers.  


McIlroy, J. 2000. New labour, new unions, new left. Capital & Class, (71), 11-45

Van Offeren, D. 2011. Derivatives reporting practices by multinationals. Journal of International Accounting Research, 10(2), 105-107

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