Social economy is an important sector in improving the GDP of several countries. In the past several organizations such as the Red Cross, the Olympics, social movement and Islamic banking have been considered to be improving the lives of the people. Most people working in the social economy organizations were volunteers. Organizations which are not owned by the state or private investors have been labeled as social economy where no one can claim to be an outright owner of the organization. Also, such organizations which are communally owned like the community supported agriculture (CSA) and food banks work towards improving the living standards of the people. In the past, researchers have considered social sector to have volunteers as workers but this has changed and included paid in workers who have formed labor unions to defend their rights. This has made the labor unions to become the most important sector in the recent social economy. Also, cooperatives, credit unions and universities have been researched in the past since they were considered to be the most important components of social economy. The following essay will look at the role the labor unions play in the present social economy.
Labor unions are organizations that act on behalf of workers by representing them on negotiations of wages, security, terms and conditions of working and general welfare of workers. They are common in the public sector of the economy and in some social economy especially learning institutions like universities, colleges and schools. They are discouraged by employers in private sector because employers view them as threats to their business.
Their main roles include negotiation on terms and conditions on behalf of the workers such as firing criteria, wages, and working hours; this is done through collective bargaining with the employers. They also, negotiate on issues like workers’ health, overtime and leave. Sometimes, they engage in political activities such as forming the labor bodies that represent workers’ concerns in legislation e.g. Canadian Labor Congress (CLC).
Labor unions were formed in the 18th century and the role was to fight for the rights of workers in the economy but as globalization took place the role of the labor unions has changed greatly. Now, they are actively involved in the running of the economy especially the social economy sector and since there is a change in social economy, labor unions have adopted ways of pursuing their agenda in the society; this has been done in two ways first, through carrying out long term changes to current system and secondly, through the acquiring the vehicles of power and trying to make the structures of society to be conducive for the operation of the economy (Fontan, 2000)
Labor unions and social economy in Canada
Labor unions in Canada are considered to be a driving force for people to improve their living standards. Also, they are seen as a means by which people can easily and democratically take charge of the country’s economy and through credit unions which are formed by labor unions to provide credit facilities to its members. Therefore, people are able to access credit facilities which they are able to invest in the economy. By investing the funds they get from credit unions, the economy is able to improve its gross domestic product (GDP). Also, cooperatives are able to offer employment opportunities to the population through paid labor and people working as volunteers.
The roles of labor unions have changed greatly in the recent times; this is because of globalization and emergence of the social economy sector as an important part of the economy of any country, for example in Canada the social economy sector contributes up to 2.6% of the country’s GDP. With this in mind, the labor unions have been conscious on their role in the economy of the country. Increase in competition in today’s economy has led to the changes in labor union’s roles because negotiation of higher wages can lead to some private companies being moved out of business (Sherk 2009). Hence, companies tend to discourage its workers from joining labor unions and this has led to a decrease in membership of labor unions especially in Canada. The study carried out shows that the membership in labor union has decreased in Canada since 2000 below 30% and also between 1990-2000 the membership fall by almost 100,000 ( Peters, 2002).
Labor unions in recent times have been functioning as labor cartel whereby they determine and allow a limited number of workers to join certain company. In this manner, they are able to cut the supply of labor to the industry in attempt to pursue for higher wages, in return the company increases their prices for the goods in the market and as a result they earn reduced profits and this passage of wage cost in form of high prices usually affects consumers and also potential workers who do not get employment opportunities; this has to some extent, greatly affected the social economy sector of the economy.
The social economy has played a major role in the development of labor unions in the world, sectors such as cooperatives and credit unions that have developed special ways of assisting their members through the provision of credit facilities; this has helped in improving the economy of several countries. Through the research carried out, it has been found out that those members who have joined a labor union get paid more compared to those who have not joined the labor union, although increasing the number of labor unions will not mean an increase to wages (Peters, 2002); this is because in the recent times competition has been high in the economy and it is no longer easy to pass the cost of wages to consumers through an increase in prices. Labor union have been able to negotiate for higher wages in only those companies that have a competitive advantage, these companies are able to increases their workers’ wages and still remain in operation but companies that fall under social economy sector cannot be able to increase wages and still remain in business. For example, in Canada companies that deal with research and development are able to increase their wages.
In social economy, the profits that are generated from the running of the company are usually used in investment and through investment countries are able to achieve great economic growth. Companies are able to generate more profit and income which is usually shared out among the shareholders in case if the company is private, and each shareholder gets the profit in ratio to the number of share he commands in the company but in case of the company which fall under the social economy, the profits are shared equally or used in other investments in other projects. The demand for high wages by the labor unions means that the profit that are set aside for investment are used to pay the wages; this make the development of the economy to be affected greatly.
Some economists and researchers have argued that labor unions have affected the recovery of economy from the financial crisis. In Canada, it is believed that labor unions have been behind the prolonging of financial crisis because the labor unions demands for an increase in wages for their members; this means that there is more money in circulation, a factor which has led to higher inflation. Also, an increase wages which leads to high prices in the market has made the financial crisis to worsen. Also, labor unions have contributed to the increase in unemployment; this is because they function as cartels which control the number of workers to be employed. Also, labor union leads to loss of jobs, this can be caused by two factors; the first one is that the companies cannot be able to increase prices in the market due to competition in the economy which means the company will close down hence loss of jobs. The second one is that the company will try to scale down its labor force so that it remains competitive in the market; this has led to decrease in jobs in the economy. (Peters, 2002).
There has been a major concern that most of those companies that close down or reduce their workforce are from those that are unionized; in contrast, the jobs in the companies that do not have labor unions have been increasing over time. For example, it is believed that for the past three decades, the jobs that have been lost is from those companies that have labor unions, the fact that labor unions leads to decrease in employment opportunities to the population through labor cartels, leads to lose of jobs has affected greatly the economies of several countries including Canada. Labor unions have played a major part in negotiating for high wages for its members; this has led to high cost of production of goods and services which in turn translates to high prices in the economy. Also, high wages means that instead of the profits being used in investment purposes they are used to pay workers’ wages; all this has made it difficult for the countries like Canada to recover from the 2008 financial crisis that affected the whole world where some countries have recovered like France.
In recent times the labor unions has taken the role of wealth redistribution among the workers, (Sherk, 2009). This is done through negotiation of wage increase, the employees do not recognize the individual employees but instead they carry out negotiations through the labor unions which they recognize. There may be not no ways of identifying the worker who is hardworking and be rewarded individual but instead negotiations are carried out collectively and once the pay rise is effected both workers who are hardworking and those who are not competent and rewarded the same hence there is redistribution of wealth among worker something that has helped the social economy to grow in countries across the global.
Globalization has led to increase in non-unionized workforce who has put pressure on the wages in several countries since some people have opted to work on part time basis rather than on full time basis this has led to a decrease in members of people who are joining labor unions. (Sherks, 2009) but since labor union has contributed much to the social economy there has been great effort toward reviving labor unions in several countries for example in Canada the government have adopted several policies which have helped in the improving the labor unions these policies include changing of the public sector and also creating laws related to employees and also social security of workers.
Also labor unions are reaching out on new strategies which are helping them to take care of their members. The labor unions have expanded to include those sectors which were initially not included in the labor unions. These sectors include those from minority groups like the youth, the immigrants and the manufacturing industries which have formed integral part of the workforces. In including these groups and those from social sector economy, it will be important in improving the economy of Canada.
Labor unions have transformed over time in Canada to form community economic development (CED) which is a very important part of the social economy. CED is mainly involved in the formation of developments which are aimed at benefiting depressed and marginalized groups in the community. Some organizations that are involved in CED in Canada include regional development organizations, for example, community futures. Also, there are group development organizations, for example, aboriginal economic corporations and the women’s community economic development. (Cabaj) These CED are very important in improving the living standards of the community in terms of social housing, healthcare development, and other needs such as the provision of food, clothing, and support to the needy in Canada. Healthcare is also important in any economy. The labor unions which are part of social economy sector has played a major role in improving the healthcare of countries through the provision of healthcare facilities and required staff to the population. There are several health care centers across the country which are built and managed by labor unions.
The social economy sector in Canada consists mainly of different categories of organizations which are very important in improving the gross domestic production (GDP) of the country. The social economy sector contributes a major percentage of the GDP of Canada. The labor unions are important in any country in order to achieve both democratic and economic development. Labor unions have been much involved in the democratic process in most countries like Canada this has been done by letting labor unions to have representative in parliament who are involved in designing legislations which are important in taking care of social economy and also the legislations which are passed tend to represent the views of the workers in Canada. Also, labor unions have same objective of improving the economy of the country like other social economic enterprises which means they have to pass law in parliament which makes the operation of social economic enterprises favorable in the economy.
Labor unions in Canada have recently reduced in number in both sectors of economy which includes the private sector, public and social sectors of the economy. This has made the increase in employment opportunities which pay low wages with flexible terms and conditions; as a result, inequality and poverty has increased in recent times. For this reason labor union have started programs of recruiting more members especially women and those worker who are in the service industries to champion the rights of them and help them in negotiating the increase in wages. Examples of unions that have used their resources in recruiting and organizing members include USWA, CAW and UNITE (Peters, 2002).
The social economy is a driving force in today’s economy. Several countries have taken social economic enterprises seriously, and they have appreciated the role played by the social economy in boosting their economic growth. The social economy forms a major part of the gross domestic production. For countries to increase their gross domestic product, social economic enterprises must be given a major consideration in any agenda towards the economic development. Countries in Europe and America have taken a great step in ensuring that social economic enterprises are given special attention in their economies.
Labor unions should work towards achieving its objective and remain relevant in developing social economy sector of the country. Labor unions should be able to give expertise services and other financial assistance to their members in order to improve the living standards of its members. Also, the government should have laws that make the operations of labor unions more favorable and they should appreciate the role played by the labor unions in improving the living standards of its members through negotiations for better terms of employment and also giving its member support in terms of finance and also giving them required skills so that they can increase the productivity of the country hence increasing the country’s GDP.