Some large corporations and government divisions have labor unions and I never really understood how those work…
They can stop a whole corporation or public infrastructure unless their demands are met, but then, why can’t they have unreasonable requests?
In: Economics
When a workforce goes on strike, the company can either give the union what they want, or ignore them and hire scabs, or a combination of the two. The problem with hiring scabs is that often those workers are untrained and perhaps less skilled, or they are more expensive—the scabs take advantage of the company’s predicament and demand more money. Hiring scabs usually decreases productivity and profits to an extent. The company does a bunch of calculations and tries to figure out the course of action. In short, will giving in to the demands of the union cost more or less than hiring scabs for an extended period of time. If the company calculates that it would be cheaper to permanently hire a new workforce because the union demands are too high, that’s what they will do. The union realize this and don’t want to fuck themselves permanently out of a job, so they offer demands that are not worse than hiring scabs.
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