Recently, the concept of productivity bargaining has gained considerable momentum in addition to conventional wage bargaining. In wage negotiations, the emphasis is given primarily to output per man-hour rather than to productivity.The positive outcome of productivity bargaining is productivity agreement.
Productivity agreement is a systematic attempt at securing greater efficiency and economy in the utilisation of.. resources, both physical and human.
The features of productivity bargaining
Firstly, it is based on the concept of exchange and self-interest which is beneficial to both parties. Secondly, it lays down the specific and direct contribution of labour towards improving productivity. Thirdly, it differs from conventional collective bargaining agreement as it is based on cost-benefit analysis. Fourthly, it is a “package deal” between the workers and management wherein a number of changes in the work practices are made in exchange for a variety of rewards.
A comprehensive productivity agreement will often have as a major objective the rationalisation of the wage structure and the introduction of more appropriate and more effective bonus systems. The productivity agreements pose certain problems for managements and unions. In the short-term, the problems of adapting to a changing climate. Furthermore, there is a problem of sharing the gains of productivity between labour and capital.
This often leads to industrial unrest or dispute between workers and employers, loss of work time, and loss of production. Nevertheless, management’s must take the lead in productivity agreements because they are basically concerned with the efficient use of resources to produce the best results.
Moreover, they can make a contribution towards the development of improved industrial relations practices which will lead not only to a substantial improvement in the utilisation of physical resources but to more satisfying working lives. Negotiation of a comprehensive productivity agreement gives management, perhaps for the first time , an opportunity to restructure it industrial relations in a company or plant. It also provides the basis for an improved managerial control and can be the starting point of a managerial policy designed to create a positive motivational framework for management and employees.