(photo credit: Courtesy)
Histadrut labor federation chairman Ofer Eini is doing what labor bosses are
supposed to do: threatening a strike if his constituents’ demands are not met.
But let’s see what his demands are: raising the minimum wage of ALL workers, and
lowering prices of certain staples for ALL consumers. These are political
demands, not economic ones, and they are illegitimate ones for a labor union or
To understand why, let’s see what unions are good at, and
what they are bad at, from a public-policy point of view.
in what is known as “collective bargaining.” Each individual worker is entitled
to negotiate over working conditions with the employer and to stop working if
acceptable terms can’t be agree to, just as the employer is entitled to refrain
from hiring someone if it won’t be advantageous.
But many people feel
this bargaining is not really very evenhanded.
Employers may be forbidden
to organize together into cartels, but since a single non-cartel employer may
hire hundreds or even thousands of employees, the employer is de facto a bit of
a cartel. So it makes some sense to allow workers to bargain collectively and to
offer or withhold their labor depending on how they, as a collective, fancy the
Economist John Kenneth Galbraith used the term
“countervailing power” to describe how the union’s market power may be a
counterweight to that of the employer or employers. For this reason, the law in
free countries allows and often even encourages this kind of organization,
feeling it can make for better functioning labor markets.
is reasonable for the unions to say to the government: Our wages were adequate
when the cost of living was low, but now that gas and water are much more
expensive, we need a raise. Of course the employer can decide whether to take
this offer or leave it; like any bargain, it depends on what the other side has
However, it is certainly unreasonable for unions to say if
their demands are not met, they will take actions to harm the
If a single employee says if his wage demands are not met, not
only will he withdraw his labor, he’ll also interfere with the smooth operation
of the workplace: that would be extortion, not bargaining at all.
this collectively would be an abuse of the privileges given unions. This is a
particular danger in a labor federation. When one union strikes to support the
demands of another, then the labor action starts to take on the characteristics
of a true cartel. This is a punitive action, not the mere withdrawal of services
on the part of the bargaining unit.
Not all “identification strikes” have
this character. Sometimes these can be justified, such as when an employer
adopts a strategy of “divide and conquer” in wage negotiations. Countering this
ability of a centralized employer is part and parcel of the reason we favor
It is equally illegitimate for the union to make political
That the employer happens to be the government has nothing to do
with the reasons unions are encouraged, even though the government happens to be
a very large and centralized employer with much bargaining power. There are
various reasons this is so.
One is that it is an abuse of the special
rights granted unions.
Unions have special rights to bargain on behalf of
workers to secure well-functioning labor markets. But when they extend their
power to the political sphere, they gain an unfair advantage over their fellow
citizens. If 80 percent of the voters oppose a policy, there is no reason it
should be adopted because the 20% who support it just happen to be government
employees who can go on strike.
Another reason is the governance issue.
It is problematic to assume that the union leadership actually represents the
membership. Just as the individual worker may be helpless against a monolithic
employer, he may feel helpless against a monolithic union leadership. This issue
is managed by limiting unions’ right of representation to a very narrow list of
topics where it may be fairly assumed they do represent the workers’
This should never extend to issues of wide public
Just as 20% of a union’s members shouldn’t be able to
railroad a public issue against 80% of the public, likewise the small number of
union leaders shouldn’t be able to railroad a public issue against the better
judgment of even a minority of union members.
The latest wave of price
increases adversely affects the living standards of workers, including union
members. It is reasonable for the unions or the union federation to use this as
a basis for demanding an increase in the wage. However, as a matter of labor
policy and public policy, it is illegitimate for them to take advantage of their
concentrated organization to influence public policy on issues that affect the
entire email@example.com Asher Meir is research
director at the Business Ethics Center of Jerusalem, an independent institute in
the Jerusalem College of Technology (Machon Lev).