Friday, December 23, 2005

On Managing Public Sector Strikes

Two Blogs today cover the New York transport strike and it aftermath. One is from a sympathetic union site: “Strike Postscript: In Appreciation of Public Employees by Jordan Barab, reprinted from Confined Space” (http://www.nathannewman.org/laborblog/archive/003598.shtml) and the other “Building Credibility Through Battling Public Sector Unions: The Case of NYC’s Mayor” by Matthew Kahn (http://greeneconomics.blogspot.com/2005/12/building-credibility-through-battling.html).

On Jordan’s article, I see running through it an indicator of how to bring reality about public sector remuneration strategies into perspective when they are subsidised by taxpayers: market testing by breaking their imposed monopolies with competition from both public and private operations. On Mathew’s article, I can only say: ‘Oh, dear!’ Playing winners and losers is not helpful – there is still much damage to be done by ‘after-strike disturbances’ and the Mayor’s ‘credibility’ is of trivial interest at this stage.


A reader wrote to me yesterday and made thoughtful observations and asked questions about the content of my postings, to which I have replied. The gist of my responses follow:

My experience of managing strikes from an employers’ point of view is that the unrestrained rhetoric of unthinking public officials usually makes matters worse. This is clearly the case in New York. I also base my approach on Adam Smith’s assessment of the mid-18th century situation where the circumstances of the labourers (next to no resources to stand a strike with no pay and near subsistence wages) was not favourable for them, hence the violent exchanges of, literally, desperate men, and the fact that the law was stacked against them (jail, transportation to the American colonies or, in the event of violence, hanging).

Today, these draconian circumstances do not apply in the USA, and certainly not among public employees. However, the rhetoric of desperation on both sides is only a few steps away, if translated into action, leading to the kind of behaviours exhibited by Chinese totalitarian forces recently against demonstrators in Dongzhou, which I assume all Americans (especially Mayor Bloomberg) condemn.

My comments were directed at reigning in the dangerous rhetoric of some of the players. It only exacerbates an already emotional situation and it ignores the range of commitment from militant to reluctant among the strikers to the action they have been persuaded, or forced by peer pressure, to undertake. This range of commitment is the key to undoing the strike action quickly, or quicker than the alternative.

I am aware that there are laws against transport workers striking and I consider them in all probability to be a necessary and correct backdrop to management of a public service and a factor in the situation. This does not preclude sensitive action when a wildcat strike occurs, led by a militant union leadership. When they do occur, or threaten, it is incumbent on the employers to consider carefully their best response. To defeat such strikes requires careful preparation. To react emotionally when they surprise you is not wise. Nor is caving in quickly to the union’s initial demands.

To defeat strikes requires time to the build up resources, including PR, and to this end the immediate response is to contain the dispute to negotiation until you are ready and not to be provoked into precipitate actions that create an excuse for the militants to call a strike, i.e., ‘keep ‘em talking’ until you are ready.

If a strike occurs, the closest possible working relationship between the employers and the politicos is required so that everybody ‘sings from the same hymn sheet’. No wild statements, threats and bravado, thank you. The campaign has to be managed. An ‘open door’ to continuing negotiations is paramount – this creates questions in the families and among the strikers as to why a strike is necessary – few workers like striking – and the option of continuing negotiations (unconditionally) saps morale and puts pressure on the militants, as does a judiciously timed invitation for employees to return to work of their own volition. This means maintaining the right to direct communication with all employees, including those who are members of the union. Speaking to employees only through the union leaders and the media is unhelpful – the militants never present the employers case fairly and the media is interested in advertising not the merits of what’s going on.

The deficit funding of NY Transport is an major issue and it has to be played as such. ‘Fellows, we have a problem’ is the tune to play, and the ‘we’ includes the transport employees.

The ‘illegal’ nature of the strike is not an issue – step well clear of making it one; getting them to desist from striking is the main strategic goal, without giving in (that would make the problem worse). Predictably, unions and sympathetic commentators claim that it costs money to provide safe, excellent public services and use this to defend all and any accretions in remuneration, health and pension packages. But protecting high-cost public services with monopolies and preventing private operators is not essential; even operating a public service with public officials is not essential, as Adam Smith indicated in “Wealth of Nations” (Book V).

‘Replacement bus drivers are easier to find than replacement air traffic controllers’ sounds great confrontational copy, but it devalues the worth of your employees – we want to boost their self-pride not devalue them! If public employees are told they are worthless by their employers, what have they got left but to hit hard against those who consider them worthless? The militants play to that tune (plus in NY allegations of racialism) and it hardens wavering strikers. The task is to undermine the militants, not bolster them. References to the air traffic control dispute need to be downplayed at an early stage, not mainlined – what else is it but a threat, not a strategy? For it to become a strategy it needs careful preparation, not impetuous delivery.

On the issues in the dispute I have nothing to say as I am not briefed on them. I am not expressing any views on their merits or otherwise. If the union is out of control or impossible to deal with, then prepare properly to defeat them; don’t get suckered into an ill-prepared anti-strike strategy that you do not ‘win’ whatever the outcome. The majority of a workforce are decent not militant; don’t make them militant by ill-considered outbursts, nor try to ‘buy’ them off by giving in to unsustainable demands.

That, in short, is what I was trying to say in my postings. It is a point of view at least worthy of being considered.

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