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Preface
The field of the industrial relations (IR) has
carried out for centuries in developed countries while the
developing countries are still struggling with economical issues.
Unfortunately, in Taiwanese enterprises, the relationships between
labour and management are at their worst state for two decades. The
reasons for this, are probably because the IR system in Taiwan is
both unreliable and ineffective. The culture and ideology in
Taiwanese management is different from that in other countries. One
obvious example in Taiwan is when a serious industrial dispute
occurs, there is rarely a potential solution found. The legislation
in IR is either out of date or useless. The arbitration system, for
instance, which is under the government’s control, makes the
outcome even more difficult and chaotic than without the government
being involved. A case example is the Kee-Long Transportation
dispute is discussed below. This article explains a model of the
solution to negotiation between labour and management in Taiwan.
Literature review
Despite the variety of ideologies that are
available, Dunlop’s theory of industrial relations is the most
common. The system of industrial relations “is regarded as
composed of certain actors, certain contexts, an ideology that binds
the industrial relations system together, and a body of rules
created to govern the actors at the work place and work community”
(Dunlop, 1993, p. 47). Nevertheless, the systems in different
countries also showed diversity because of the history, culture,
regulations etc. For instance, the former Soviet Union and Eastern
Europe of the communist Party was decisive in the designation of
government ministers, plant managers, labour union leaders, judges,
regional and local public officials, and leaders of Organs of the
press. Kerr, Dunlop, Harbison, and Myers found that “in accordance
with their rules the labour unions, like all other bodies in the
Soviet Union, have to follow the leadership of the party in their
policies and activities.”(1975, p. 296).
Kochan and Mckersie (1990) stated “the U.S.
industrial relations will continue to display considerable diversity
across industries, firms unions, and occupations. Moreover, there is
every reason to expect that the future will continue to be
characterized not only by the historic dynamic interplay between
union and non-union systems but also by an increasing variety of
arrangements governing employment relationships.” (p.250). Atleson
(1992) also argued that “collective bargaining and arbitration
also reinstitute and reinforce the status notions found in decisions
of common law courts. Arbitrators and the Board, for instance,
require that employees show respect, inactions and words, to
supervisors.” (pp. 177-178).
Concerning the negotiation between labour and
management, Nash’s (1950) bargaining theory specifies how
negotiators should divide the pie, which involves “a determination
of the amount of satisfaction each individual should expect to get
from the situation, or, rather, a determination of how much it
should be worth to each of these individuals to have this
opportunity to bargain”. Nash’s theory makes a specific point
prediction of the outcome of negotiation, the Nash solution, which
specifies the outcome of a negotiation if negotiators behave
rationally. Nash’s solution will satisfy the following five
axioms: uniqueness, pareto-optimality, symmetry, independence of
equivalent utility representations, and independence of irrelevant
alternatives (Thompson, 1988, pp. 74-77). In 1965 Walton and
Mckersie proposed a model of the negotiation by behaviour
prospective. In the mean time, Chamberlain and Kuhn introduced the
bargaining power theory by the cost approach (Wu, 1996, p. 626-630).
Thompson (1998) discussed an integrative negotiation and craft
integrative agreement when two parties were negotiating (pp. 44-46).
A model of a dispute solution has developed by the author to refer
to some of these theories.
The effects in
negotiation between labour and management
Chamberlain and Kuhn (1965) introduced the
bargaining power theory in which they believed both parties will
think over concerning the costs of acceptance and not acceptance
from the offer of the counter while the negotiating process. The
bargaining power of the labour union is:
Where 
is the cost of denying the offer of the labour union by the
management
is the cost of accept the offer of the labour union by the
management, and,
is the cost of denying the offer of the management by the labour
union
is the cost of accepting the offer of the management by the labour
union.
When the value of formula (1) is bigger than or
equal to 1, it means that the bargaining power of the union is
larger than the bargaining power of the management. The obvious
decision for the management is to accept the offer from the union;
on the other hand, when the value of formula (2) is bigger than or
equal to 1, it means that the bargaining power of the management is
larger than the bargaining power of the union. The obvious decision
for the union is to accept the offer from the management. Therefore,
both parties will do their utmost to change MCD, MCA, UCD, and
UCA in order to promote the bargaining power for themselves
while negotiations are going on. For instance, the union will
announce a strike will be filed in order to promote MCD, and,
the management will force the union to agree to the conditions that
they have offered by increasing the level of benefit sharing or the
system of rewards in order to reduce UCA.
A description of the model is as follows:
“Bound to limit” effect
Firstly, in formula (1) when MCD bound to
limit and MCA is also bound to limit, then UBP will
head towards 0. That is:
and
 ,
In other words, if the union announces to file a
strike to increase MCD, or by another way, the union offers a
deal which management cannot accept, MCA, management will
reject the deal. They will refuse to negotiate and let the dispute
continue. The UBP will therefore go towards zero and
there will be no solution.
In formula (2) when UCD bound to limit and
UCA also bound to limit, then MBP will go towards 0.
That is:
and
 ,
Same as above, if management announces to shut
down production to increase the UCD, or by another way,
management proposes to reduce the level of wages to which the union
cannot accept, they will refuse to negotiate the dispute continue.
The MBP will also go towards zero and without a solution The
effect of going towards zero and without a solution are called as
“bound to limit” by the author.
“Loss-loss agreement” effect
Secondly, there are four alternatives between
union and management concerning cooperation or defection was found,
then, we get four cells:
Cell A, Union chooses (+) and Management chooses
(+);
Cell B, Union chooses (+) and Management chooses
(-);
Cell C, Union chooses (-) and Management chooses
(+);
Cell D, Union chooses (-) and Management chooses
(-). The situations that the union and management can face are
illustrated in Figure 1.
| |
MANAGEMENT’S ALTERNATIVES |
| Management chooses cooperation |
Management chooses defection |
|
UNION’S ALTER-
NATIVES |
Union chooses defection |
A (+, +) |
B (+, -) |
|
Union chooses cooperation |
C (-, +) |
D (-, -) |
Figure 1. Consequences of union and management’s
situation
Figure 1 indicates that the union and management
will either have a win or lose agreement, depending on what they
realised what the MCD, MCA,
UCD, and
UCA are. When MCA and UCA are bound to limit, both
parties will tend to choose defection, and let the outcome become
negative. Therefore, the loss-loss agreement can easily happen.
The mechanism and resolution of industrial
dispute in Taiwan
There are many ways to demonstrate the strike by
the labourers. In the developing countries, if a new agreement
between labour and management does not occur, a strike may be the
result after the date of an agreement has expired. Unless the new
agreement has been approved and the dispute has ended, the work in
the firms will not proceed as usual. Nevertheless, the state showed
different interrupts while the strike is held. Voluntary mediation,
composed mediation and composed arbitration were used to end the
dispute. Experts of industrial relations argued controversially for
the state to intervene. Basically, a composed arbitration is
recognised to be a democratic resolution of the dispute by the
arbitration committee decisions instead of continuing the strike,
which causes both production and salary loss. Normally, the weaker
the labour union is, the more interested that they are in the
arbitration procedure. On the contrary, when the labour union is
strong enough, they will be more opposed to the composed arbitration
and the strike will not cease for the moment.
The role of the state and its issues
In Taiwan, the law gives the labour unions some
power, but limits their ability to strike as well as other options.
Whether the controlling of the dispute is going well or not, it
impacts upon the relations of labour and management. In general, the
organisation of the union is loose and non-voluntary, and an upper
union either in the area or in the occupation, is not supportive of
the action for their associated union.
There is not only historical but also cultural
reasons to consider as well. The unions are always influenced by
both the government and the ruling political party (Leggett, 1999).
The Taiwanese government executes the Labour Unions Law (LUL) to
control the unions intentionally. The LUL explicitly stipulates that
the government should provide regular stipends to unions (see
article 22). The Federation of Unions, both on the regional and
national levels are receiving stipends from the government for more
than seventy per cent of the total spending average each year.
The Arbitration Disputes Act
Since existing labour-management disputes dealing
act - The Arbitration dispute Act (ADA) has being revised and
implemented, it has been a great improvement in tackling problems,
which have occurred between the labour-management disputes dealing.
However, the current ADA is still inadequate. Based upon the ADA, it
can be divided into two dimensions: “the entity law of
labour-management dispute’s dealing” and “the procedure law of
labour-management dispute’s dealing”. In Taiwan, there is no any
specific regulation to set the current “entity act of
labour-management dispute’s dealing”, then to adopt it and to
make it controllable. Thus, it is used when disputes occur and is in
itself, becoming a thorny question that needs to be solved.
Generally, the real disadvantage is in the
current ADA is no any real action to exercise labour-management
disputes dealing under premise subject. As to the latter, the
current ADA also failed to apply with the social used disputation
resolution and there is no any further resolution on reconciliation
and arbitrator’s qualification and its structures are still to be
set in details. Hence, in dealing with labour-management disputes,
how to set a job for the authority of labour administration in
proceeding with the disputation process and method? And how is the
difference between the so-called dispute client and the so-called
accused client? As well as how is the role of arbitrator and its
connection with the act executor in the case reconciliation? Then
where do the act fees come from and what is its effectiveness of
disputation & dealing in the said dispute justify its judgement
and its procession speed? And what is the connection between the
explicit of act procession steps and the effectiveness of the
disputation resolutions? Yet, how is the basic theory upon with the
resolution process? Thus viewed to the labour-management dispute’s
dealing procedure and resolution having a closed implication, this
context shall resort to the theory’s consideration on its effect
to the existing dealing procedures then to make a very possible and
positive recommendation.
ADA was introduced in Taiwan in 1988. At the
present, seems to be incapable of handling the dispute effectively
and properly. The basic problem is that the mediation or arbitration
procedures, as they are stipulated in the ADA, are primarily
designed to handle labour dispute problems with little power in some
ways. The court is the only place that can settle disputes but that
can take a very long time. On the other hand, the right to take an
industrial action is limited under the legislation. The only period
of the action should be taken within after the mediation has failed
and before the arbitration has held. Normally, government will hold
the arbitration while the action is going on. And in this
circumstance, the action ceases immediately, or else, the actors
will be punished for going against the statute. Even though the
arbitration has interfered to the action, the outcome had not ever
been a final result because normally the employers will not be
willing to be bound by the decisions. As the result, the outcomes of
disputes are just disappointing for both parties in the end.
Kee-Long Transportation Co.
Dispute Case
Now, we head to the view of example of the
dispute of Kee-Long Transportation Co (hereinafter ‘Co.’)
dispute case in Taipei 1992. When ‘Co.’ was in financial trouble
before the dispute occurred. Then, ‘Co.’ sold the stock of
company to a person who owned the other two Transportation Co. The
employees were afraid of being dismissed by their new employer,
thus, turned to ask the Labour union of Kee-Long Transportation
(hereinafter ‘Union’) to negotiate with management. The ‘Union’
proposed three conditions concerning wages and benefits to the
management. After management refused to negotiate, the ‘Union’,
thus, filed a grievance to the local government. Then, the
government tried to mediate in the dispute according to the ADA law.
Nevertheless, the mediation failed because the ‘Union’ asked for
eleven extra conditions.
On the 2nd of June, the ‘Union’ held a
meeting and voted to go on strike. After two days of waiting for an
answer from ‘Co.’, the strike began on the 4th of June and ‘Co.’
shut down the firm immediately. A non-official mediation held by the
central government on the 12th of June and conciliation talks were
still going on, they decided to hold another meeting negotiate
further several days later. Suddenly, ‘Co.’ announced 146
employees were fired on the 18th of June by the reason of leave
their jobs. “Never promising anything to the union but trying to
scare them of,” ‘Co’ declared that: “The negotiation may
re-start anytime only if the employees started working again.” the
president of ‘Co.’ stated and implied the employees would be
hired again if they came back to work. The separate strategy of
'Co.' to split up employees and the ‘Union’ was obvious.
The composed arbitration started on the 19th of
June by the local government according the law of ADA and urged the
dispute ceased at once. The ‘Union’ stopped strike and went back
to the workplace but ‘Co.’ insisted the fired workers could not
work since they had been fired. Workers who could not work turned to
the government asked for their jobs. On the 5th of July, the ‘Union’
protested on the streets and addressed ‘A letter for the public’.
Then, they launched several actions for the rest of time while the
strike went on. For a period at the end of June and the beginning of
July, the ‘Government’ tried to conciliate both parties but they
refused to change their positions and to compromise. “Co.’
insisted the workers should report to the company individually but
the ‘Union’ insisted ‘Co.’ should collectively withdraw the
orders of the fired employees.
The arbitrate committee held the meeting on the
22nd of July. The decisions were made by the committee as: “both
parties should return to the peace as soon as possible”. But both
parties would not listen to the committee and continued the struggle
for the moment. As ‘Co.’ refused to end the lockout, the ‘Union’
decided to occupy the workplace by force. ‘Co.’ sued the 'Union'
in the court as ‘rush in and rob. Finally, On the 28th of July,
the committee decided upon three guidelines: (1) ‘Co.’ should
stop the lockout within seven days; (2) the wages should be paid
within the arbitration period; and (3) the three kinds of wage and
benefit disputes will be arbitrated after the reasons for the
dispute were reported to the committee by ‘Union’ and ‘Co.’
within three months.
‘Co.’ refused to obey the arbitration, and,
‘Union’ sued to the court and asked the court for the compulsory
execution on the 7th of August. Nevertheless, the court refused to
do so, the reasons why are as follows: “The first and second
decision of the arbitration had no relationship with the dispute
objectives and the last decision of the arbitration cannot even be
executed.” Several years later, the court decided the “Union”
should indemnify ‘Co.’ for occupying the workplace.
Discuss: the solution of
the dispute
Refer to the above case, we clearly know that in
the game of ‘Union’ and ‘Co.’ of Kee-Long dispute, it
finished with a lost-lost outcome. The Arbitration Board failed to
make the decisions since the court refused to execute the decisions
several years after. The outcome was the dismissed employees left
their jobs and the management found more disciplinary rules to
manage employees by replacing them with new employees but with less
money and reputation.
“Bound to limit”
effect
At first, both parties tried to force the other
to accept their own proposals by enacting upon many different
actions. The ‘Union’ disregarding the situation and proposed
unacceptable terms to ‘Co.’ and started the strike several days
later. The perception of the ‘Union’ was not justified to ‘Co.’.
On the other hand, ‘Co.’ not only refused to negotiate, but also
shut down the firm when the strike had begun and fire employees in
what could be considered as a serious attack to the ‘Union’.
According to the effects of the model, the “Bound to limit”
effect is occurred. In this situation, both did their utmost to
revenge the others’ behaviour. The bargaining power of both
parties went towards zero and without a solution in sight. In other
words, this was an impasse which they could not solve by themselves.
The “Bound to limit” effect, then, happened.
“Loss-loss
agreement” effect
Refer to the dilemmas situation of game theory,
in order to reduce the lose, both parties will use defection
strategy. The dispute case showed ‘Union’ and ‘Co.’ both
wanted revenge. Nevertheless, because the cost is to high to either
accept or deny, both parties in the case chose a policy could not
have a different outcome. Therefore, a revenged “tit- for- tat”
effect could happen easily.
In the case, both parties were envious of each
other. One of the characteristics of both parties is competitive
behaviour which caused them to lie. The case showed ‘Union’
intrusted ‘Co.’ would not fire employee, and ‘Co.’ intrusted
‘Union’ would not ask for additional conditions. One of the
reasons of the dispute was that they believed they could beat the
opponent. Beside, both parties were not truthful and blamed each
other when agreements broke down several times. ‘Union’ and ‘Co.’
were untruthful to each other. The “Loss-loss agreement” also
occurred.
Conclusion
Nash’s bargaining model is to illustrate the
precision and quantification of negotiation theory. However, Nash’s
solution is built on the assumption that people have complete and
perfect information. This article is proposing a characteristic of
“Bound to limit” effect because both parties’ believed either
to accept or deny the counter’s offer were unbearable. A revenged
tit-for-tat situation can never win against any of the strategies it
played against. If it cooperates on the first trial, it can never do
better than its opponent.
Thompson and Hastie (1990) uncovered a
particularly insidious and widespread effect in negotiation:
loss-loss effect. They constructed a negotiation situation in which
the parties involved had compatible interests on a subset of the
negotiation issues. Thompson (1998) argued that most negotiations
are of one of three kinds: pure conflict, pure coordination, or
mixed-motive. In pure conflict negotiations, parties’ interest are
directly opposed; pure coordination exists when parties’ interests
are perfectly compatible, and, the integrative potential of
negotiation is the increase in joint profit available to negotiators
over and above the joint profit afforded by a fixed-sum solution.
This article is also proposed by the author as another way of
loss-loss effect.
This paper argues that there is: firstly, a trend
towards a new coalition of unions due to the poor performances of
the current unions system; secondly, the labour unions in Taiwan
involved in disputes have frequently petitioned the government
authorities to assist in solving disputes, and only a few disputes
have led to strike or sabotage; and thirdly, even though most of the
industrial actions originated in the employers' refusal to comply
with labour laws. Lin (1998) found in his research the same facts.
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