7.Why must labor and management be able to determineaccurately the cost of wage proposals?
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Union labor negotiators press for an increment of wages when a company makes profits since its ability to pay high wages is higher. Their argument is linked to productivity theory, where they emphasize that employees provide labor, which is the essential input in an organization’s productivity and, therefore, profitability. Consequently, they demand that if an organization is making high profits, it can better pay its workers who contribute to its financial success. On the other hand, management negotiators oppose the high wages increment based on organizations’ ability to pay higher prices. First, they argue that unions will not advocate payments based on organizations’ ability to pay when profits decrease. Unions want a consistent wage rate for employees during hard times and increased wages when an organization
