Business Schools Ignoring the Voice of the Trade Union

After 100 years of establishment of International Labor Organization, I think there is no doubt that trade union movement- collective bargaining helped improve the life of workers, created the middle class, which helped the economy to grow by sharing the gains of productivity. And reduce inequality, thereby advancing social justice. One may say this the things of the past- it is no longer an issue in the gig economy as everybody is empowered to make his life better, and there is an abundant opportunity. Let us take stock of the situation from past to present. The new volume of ILO indicates that higher the percentage of employees collectively determined wages lower is inequality, and the opposite is also true. In other words, fewer workers are covered by collective bargaining higher is inequality. One of the reasons that helped the world to recover from great depression is not by chance. It is through the intention of the public policy that encouraged collective bargaining. While we find reformation of labor codes, elimination of collective bargaining, and weakening the role of trade union after 2008 depression, we do not find economic recovery much after the recession. A study in the American Sociological Review estimated that the decline of unions might account for one-third of the rise of inequality. Stirling Smith, in his article 'Why Trade Unions are a Good Thing' published in Ethical Trading Initiatives, pointed out several good things of having a strong union with evidence. Some of which are:

Union density in the UK has declined from its peak in 1975 to today has reduced wages. The share of wage in national income fell from 76 % in 1975 to 67% in 2015, which is a direct loss to GDP, a point which ILO is persistently pointing out to the world. High involvement of trade unions with the organizing committee of the London Olympics in 2012 and Sydney games brought down drastically the fatal accident level.  Canadian research on insurance claims from building sites found a link between unionization and better safety. Things are so worse now that even IMF, traditionally perceived as organized labor, came out with their concern on inequality and less job creation in their publication titled: Power from the People. A certain amount of wage inequality raises motivation to wealth creation, but a higher difference is associated with less sustainable growth even in the advanced economies. While one of the driving factors for this is the less demand for low skilled jobs under high technology environment and little can be done in this regard, but there is a significant role of an empowered trade union. Their research findings are consistent with prior views about the effects of the minimum wage." we find strong evidence that lower unionization is associated with an increase in top income shares in advanced economies during the period 1980–2010, thus challenging preconceptions about the channels through which union density affects income distribution."

They concluded that the main channels through which labor market institutions affect income inequality are the following:        Wage dispersion and Unemployment.  Research confirms that the extent of wage dispersion is inversely related to trade union concentration. At the same time they also negate the views of some economists – 'that while stronger unions and a higher minimum wage reduce wage inequality, they may also increase unemployment by maintaining wages above "market-clearing" levels, leading to higher gross income inequality. But the empirical support for this hypothesis is not very strong."

 The authors, Florence Jaumotte and Carolina Osorio Buitron, cautioned that while strong unions can influence voters to vote for political parties that promise to redistribute the income or may force all political parties to take the same stand, inequality can harm more to society by allowing top earners to 'manipulate’ the economic and political system.

They concluded that in such a situation, 'there would be grounds for governments to take policy action. Such action could include corporate governance reforms that give all stakeholders—workers, managers, and shareholders—a say in executive pay decisions; improved design of performance-related pay contracts, especially in the risk-happy financial sector; and reaffirmation of labor standards that allow willing workers to bargain collectively'. This cannot be implemented, in principle, without the moral support from the corporate leaders, about 50 % of whom are MBAs. It is in this context we should examine the role of MBA education system in sensitizing the MBA students to the issue of income equality, sustainability, and trade union. Before we take it up this issue, we have first to argue that the CEOs and other executives are not sensitized enough.

Steven Greenhouse' report in The Atlantic elaborates how Walmart persuade its workers not to unionize. One example is, the "Labor Relations Training" presentation for store managers that echoed the "Manager's Toolbox" in suggesting that unions were money-grubbing outfits caring little about workers' welfare. While Walmart claims they take care of their associates well, Ken Jacobs, the chairman of the University of California, Berkeley’s Labor Center, said, “Walmart's benefits are well below the standard for union groceries. They are not 'great benefits' by any standard."

Samsung Group, South Korea’s biggest conglomerate recognized trade union activities only in 2018. It is reported that CEO of  Tesla once said “unionization would be antithetical to Tesla’s mission” and implied that he would resolve safety issues in Tesla’s

auto plants if workers quit their union campaign, which is totally illegal,

according to the NLRB’s lawyers.”.  It may be mentioned that Tesla’s auto plant in Fremont, California, which was named

one of the most dangerous car factories in the country in 2016.

Hostility Silicon Valley to unions is a common knowledge, which is the target perching land of our MBAs and technocrats.

Carol Zabin, director of the Green Economy Program at UC Berkeley’s Center for Labor Research and Education commented, “I don’t think the industry is really considering the value of workforce representation for their own businesses, much less the role unions play in the broader economy to combat inequality." Despite operating in the capital- and labor-intensive industries, like construction and automotive manufacturing, many clean technology companies see themselves as “software startups that contract for the hardware installation," Spector said. And among startups, the anti-union sentiment is like a first principle. More and more software content in the traditional industries, these industries are going to be managed by technology persons who undermine the importance of TU. Workers from these industries are afraid of this development, and their fear is not illogical as there is evidence. As we have argued elsewhere that TU improves the quality of life of workers, then the future is not so high or rather bleak for workers. 

The Role of Business Schools

Business schools are often used as shorthand for “some combination of greed and stupidity," commented by Parker, a senior academic. In his book, he argues that business schools focus on capitalist firms, companies, and corporations. With such a strong bias towards capitalism, business schools lack scholarly credibility while focusing only on one model of organizing – capitalism's model.

 As a consequence, business schools lack diversity in curricula, primarily due to their narrow idea of market capitalism. The CEOs of top companies are invited to address the students who become their role model. But there are many examples that such heroes become 'no-body' within a few years. As we are focusing our discussions on the role of trade union in the economy, let us concentrate as to how the so called, Human Resource Management is being taught in the MBA course. By its name itself, it indicates that human beings are resources like capital and energy, to be managed to build a thriving organization. And it can be scrapped like any other resources whenever organizations feel necessary, and in doing so it rationalizes the action by placing a broader objective – to achieve the mission and vision of the organization and its sustainability, with hardly any concerns for his family. It also spends a lot of discussion as to how to deal with the problem created by organized labor in the form of Trade Union. Often a CEO become a role model when he can keep the unions away, a successful strategy. Instead, I would say when the same subject was taught as 'Labor relation' it used to put some weights on the positive side of TU.

In an article in PERSPECTIVE, Jeremy Avins, Megan Larcom and Jenny Weissbourd commented, “We attend two top MBA programs where courses often treat front-line workers (and, increasingly, contractors) as an expense to be tolerated instead of as an asset to be valued. Their concerns and contributions are rarely discussed on campus.”

Wallace Donham, who pioneered the case method of teaching at Harvard once stressed that the students need to hear labor's view. Yes, probably they get, but Harvard cases, widely used 'Schools across the world but they get mostly the negative side of the trade union as Andrew Jack pointed out – "The largest share of Harvard’s cases are dominated by US examples. Critics say women leaders are insufficiently represented, and some themes, sectors, and perspectives — including those of labor unions — are played down”.

MIT Sloan School of Management professor Thomas Kochan once commented, “Labor relations is often either ignored or if covered, curricula tend to focus on how to avoid rather than how to work with workers' rights groups." But it was not so always. Harvard introduced a course in 1942, Trade Union Program to develop labor leaders, and it enthused many researchers to take up issues related to the voice raised by the labors. With time it is removed and shifted to Harvard Law School, and with this, it went off from the minds of the business leaders. The world follows Harvard, so it became the norm. Things will change if business schools start inviting trade union representatives also to address the students so that the students get a chance to hear the voices of the front liners. I remember when I did my post-graduation in National Productivity Council's, India, institute on Industrial Engineering several trade union leaders addressed us and we got a lot of inputs from them. As a result, when I talk to my peers, I think we are all not antagonistic towards trade union. It may be mentioned that NPC is a tripartite body.  For more than a decade, I am in academics, and I have not come across any single instance where Institutes have invited TU leaders. Since beginning the students are placement oriented and focused and as they are the Annyadata ( who feeds the schools with big money fees), they are treated as customers, and we all together are single-minded to make them satisfied. Things need to be changed, and change should come from within. We never ask a student, 'did you interact with the workmen during your summer projects?'. The answer will possibly be no, perhaps they may say management has told who to converse with and who to be avoided.