Employee strike action: Does it really ever pay?
Worker strikes are not a new phenomenon and they can significantly impact businesses, workers, and the broader economy. One of the earliest recorded strikes occurred in ancient Egypt in 1152 BC when individuals working on tombs stopped working to protest delayed wages from Pharaoh Ramesses III.
In the modern era, strikes became more prevalent during the Industrial Revolution as workers sought to improve poor working conditions, long hours, and low pay in burgeoning factories.
But do strikes actually bring the change employees require, or are they just an inconvenience and cost to companies, employees and the economy?
The legal requirements
Strikes are protests in which employees collectively cease working to express grievances and demand changes from their employers. They are often a last resort after negotiations and other efforts to address concerns have failed. Labor unions or worker groups typically organise strikes and can involve workers from a single company or across an entire industry.
The legality of strikes varies by country. In many places, strikes are protected by labor laws, provided they follow certain procedures, such as giving advance notice. In the early eighties, Poland made history with the Solidarity Strikes led by the Solidarity movement. These strikes were crucial in challenging the communist government and eventually led to significant political changes.
Strikes for worker change
Last year, the Writers Guild of America (WGA) went on strike against the Alliance of Motion Picture and Television Producers to fight against AI fear and streaming issues.
And it was a success in the long term for those taking action. After striking for almost 150 days, an agreement was made to change how writing will be done in the near future. The WGA also requested improved writing wages, better conditions, and protection against the rise of AI in writing.
However, for businesses, strikes can lead to financial losses, disruption of operations, and damage to reputation.
The prospect of indefinite strike action
In early July this year, workers at South Korea’s Samsung Electronics, Korea’s biggest company, took strike action. Originally planned for three days, workers took indefinite strike action to campaign for better pay after no agreements were made. Their union, The National Samsung Electronics Union (NSEU), has approximately 30,000 members (almost a quarter of Samsung’s South Korean workforce). It also demanded changes to the employee bonus scheme and an extra day of annual leave for unionised workers.
While their last strike had little impact (according to Samsung) on business productivity, whether employers give in to striker demands or not, such strikes still impact the company’s reputation. Conversely, the union reports that some equipment ran more slowly than normal due to the strikes implying the productively was impacted.
To an outsider, mass employee strike participation is unlikely to look positive. If a company is really motivating and engaging its people, then why are so many (in this case, numbers were not released, but there were predictions of over 6,500 workers) taking annual leave if there is no cause to fight? Surely morale is low if individuals make such a public stand.
But will the strike action affect the company’s attractiveness? Time will tell, but Reuters reported that on the day the strikes started: ‘The share price was up 0.2% after rising as much as 1.72% earlier in the session to its highest since January 2021.’
Unions as part of strike action
While unions tend to be instrumental in driving strike action and supporting employees, their involvement may be potentially positive for employers.
Deborah Dean, Associate Professor of Industrial Relations and Co-director of the Industrial Relations Research Unit (IRRU) at Warwick Business School, said: ‘The absence of unions doesn’t mean the absence of discontent among the workforce. What unions do is represent the workforce in a de-personalised way. They can channel inevitable, occasional conflict in manageable ways so it can be resolved. In fact, unions have been called “managers of discontent”.’
She adds that unions help to bring employee issues to the surface rather than burying them: ‘There are always legitimately differing interests in the workplace. And if that’s not recognised then conflict can find an outlet in other ways, such as increased turnover and absenteeism, reduced motivation, as well as difficulties in recruitment.
‘In some conditions, strike action can actually be beneficial for employers. It can save on labor costs, which may be helpful if a company is facing financial pressure.’
Strike action may be cathartic
Workers may face loss of income during the strike and potential retaliation from employers, although laws in many places aim to protect against this. Strikes can also prompt broader social and political change, drawing attention to issues and leading to legislative reforms.
Dean adds that strike action can potentially help with employee mindset: ‘There may also be a productivity bounce after a strike action, which is fascinating. Taking strike action can have a profound and positive psychological impact for workers who spend their working lives being told what to do.
‘This can be about feeling some reassertion of control over life and may help to explain why employers sometimes see an increase in worker productivity after industrial action.’
What approach should employers take?
Unsurprisingly, strikes can create complex challenges for businesses. Employers must consider their legal obligations, the impact that strike action may have on productivity and morale, and the possibility of negative publicity.
In the first instance, to mitigate the chance of strike action, employers should push for constructive dialogue with employees and trade unions to highlight their position of taking grievances seriously. This may lead to mediation or the resolution of issues.
However, employers should ensure they’re inclusive of trade unions throughout discussions or negotiations so that they do not risk a breach of relevant laws. Throughout any industrial action, employers must also be cautious about how they treat those who do or plan to strike. Discrimination or intimidation could lead to legal issues, and their energy is better placed looking into workforce planning in the absence of staff.
According to Adrian Horne in People Management: ‘Ultimately, navigating strike threats requires a strategic and legally informed approach. Businesses must strike a delicate balance between upholding their operational interests and respecting employees’ rights to collective action. By understanding their legal obligations, fostering constructive dialogue and preparing effectively, employers can navigate strike threats constructively.’
Author: Sarah Haselwood
