Week 7: Balancing Outcomes: The Environment and Human Agents
What determines employment outcomes?
- Employment outcomes are the product of interactions between employees and
employers in the sociopolitical, strategic, functional, and workplace tiers of the
employment relationship
- A full understanding of the employment relationships requires two components: the
environment and human agent (only focusing on environment in this course)
- Bargaining power between labour and management was the determinant of wages,
hours, and other terms and conditions of employment
- Analyzed as a product of the environment
- The employment relationship is a product of the environment and internal needs of
individual human agents
- Interactions between employers and employees can happen at the sociopolitical,
strategic, functional, and workplace levels
Dimensions of The Environment
The Legal Environment
- Establishes the parameters for employer-employee interactions
- Employment laws that provide workplace protections shape employment outcomes
by mandating certain employer behaviours and outcomes
- Common law regulations determines the balance of power among efficiency, equity,
and voice
- A law may not have an obvious causation on something, but it still causes it
- Tax laws can affect business decisions, therefore employment and
labour relations outcome
- Prohibiting strikes increases other forms of industrial conflict rather than removing it
The Economic Environment
- Determine relative power and employment outcomes
- The demand for labour is derived from labour’s role in the production process
- Employee bargaining power is greater when labour demand is more inelastic
1. Labour is essential or difficult to replace
2. Demand for resulting product/service is inelastic
3. Labour accounts for a small fraction of the production cost
4. The supply of the other factors of production are inelastic
- Macroeconomic environment can determine the balance between efficiency, equity,
and voice because of the effect it has on bargaining power
- Bargaining power is high with inelastic labour supply because a larger wage increase
is needed to keep the employees
- Low with elastic labour supply; employers can get larger labour supply with
smaller wage changes
The Technical Context
- The nature of production and organization of work
- Whether the workplace is fixed or variable; workplace stability; size and hours of
workforce; worker’s job content and responsibilities
What determines employment outcomes?
- Employment outcomes are the product of interactions between employees and
employers in the sociopolitical, strategic, functional, and workplace tiers of the
employment relationship
- A full understanding of the employment relationships requires two components: the
environment and human agent (only focusing on environment in this course)
- Bargaining power between labour and management was the determinant of wages,
hours, and other terms and conditions of employment
- Analyzed as a product of the environment
- The employment relationship is a product of the environment and internal needs of
individual human agents
- Interactions between employers and employees can happen at the sociopolitical,
strategic, functional, and workplace levels
Dimensions of The Environment
The Legal Environment
- Establishes the parameters for employer-employee interactions
- Employment laws that provide workplace protections shape employment outcomes
by mandating certain employer behaviours and outcomes
- Common law regulations determines the balance of power among efficiency, equity,
and voice
- A law may not have an obvious causation on something, but it still causes it
- Tax laws can affect business decisions, therefore employment and
labour relations outcome
- Prohibiting strikes increases other forms of industrial conflict rather than removing it
The Economic Environment
- Determine relative power and employment outcomes
- The demand for labour is derived from labour’s role in the production process
- Employee bargaining power is greater when labour demand is more inelastic
1. Labour is essential or difficult to replace
2. Demand for resulting product/service is inelastic
3. Labour accounts for a small fraction of the production cost
4. The supply of the other factors of production are inelastic
- Macroeconomic environment can determine the balance between efficiency, equity,
and voice because of the effect it has on bargaining power
- Bargaining power is high with inelastic labour supply because a larger wage increase
is needed to keep the employees
- Low with elastic labour supply; employers can get larger labour supply with
smaller wage changes
The Technical Context
- The nature of production and organization of work
- Whether the workplace is fixed or variable; workplace stability; size and hours of
workforce; worker’s job content and responsibilities
