One baker, or four thousand?: Prices in the shops have risen 7% this year. Leila, a baker at Goldcrust's Eastfield bakery, asks her manager for a pay rise. He says pay is set by head office, and head office does not reply.
Goldcrust plc has 400 bakeries. It can manage without one baker. It cannot manage without four thousand.
So the bakers act together, through their own organization (a trade union). A trade union is a group of employees who pay a regular fee to belong, a subscription. It speaks for them to the employer. Most of Goldcrust's bakers belong to the Bakers' Union, and Leila is its elected representative at Eastfield.
A union negotiates for better pay and working conditions, campaigns for safer workplaces, and stands beside a member who has a dispute with a manager.
How the pay talks run
The claim
The Bakers' Union asks for an 8% pay rise for every baker, because prices have risen 7% and Goldcrust's profits are up.
The offer
Goldcrust's HR director offers 2%. Each 1% on pay adds about $1.8 million a year to the wage bill.
The talks
The two teams meet, argue, and trade. The union drops to 7%; Goldcrust rises to 3% and offers an extra day's holiday.
A deal, or not
If they agree, one deal covers every baker in all 400 bakeries. If they do not, each side looks for other ways to push.
That process is negotiating as two groups (collective bargaining): representatives of the employees and of the employer agree pay and conditions for everyone at once. It is an approach both sides use. It is usually the first thing they try, and every dispute ends back at the table.
What it gives the bakers
- A far stronger voice than one baker asking alone
- One deal for everyone, so bakers doing the same job are paid the same
- No pay is lost: nobody stops work while they talk
What it gives Goldcrust
- One set of talks instead of 4,000 separate ones
- A deal it can plan its costs around for a year or more
- Problems raised at the table before they turn into a strike
Its limits
- Slow: weeks of talks while the anger grows
- It works only if both sides are willing to move
- A compromise can leave both sides unhappy: 5% is not 8%, and costs more than 2%
Talking comes first: Collective bargaining is the calm approach: nobody stops work, nobody loses pay. When the talking stalls, each side has other, harder ways to push.
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December, and no deal: After six weeks the talks are stuck at 3% against 7%. December is Goldcrust's busiest month, and about a fifth of its December bread is baked on overtime: bakers staying late and coming in on their days off.
The Bakers' Union tells its members: from 1 December, work to rule.
Doing exactly what the contract says and not one thing more is work-to-rule. The bakers turn up, work their hours and follow every rule to the letter. They are still at work, and still paid.
It hurts because a business runs on goodwill: people doing a little more than their contract asks, every day, without being asked.
A December night at Eastfield, worked to rule
Start on the minute
The bakers usually arrive early to light the ovens. Now they arrive at 3 a.m., the time in their contracts, so the first bread is late.
No overtime
Nobody stays past the end of the shift and nobody comes in on a day off. The 400 loaves a night that overtime bakes are not baked.
No covering
A baker is off sick. Normally the others share his work; now it is simply not done.
Every check, slowly
Every hygiene and safety check is done in full, in order, by the book. Each one is correct; together they slow the night down.
The result
Eastfield bakes 1,600 loaves instead of 2,000, and the vans leave late. Across 400 bakeries, the shops run short in the busiest week of the year.
Talks are still stuck in mid-December. The union calls a strike for the Saturday before Christmas: the bakers will stop work for the whole day (strike action). A strike is the withdrawal of labour. It is usually the last resort, because strikers are not paid for the days they strike.
| Work-to-rule | Strike action | |
|---|---|---|
| What the bakers do | Their contracted work, nothing more | No work at all, for a set time |
| Are they paid? | Yes: they are keeping to their contracts | No: they lose pay for every strike day |
| Effect on Goldcrust | Output falls, but the full wage bill is still paid | Output stops; a whole day's sales are lost |
| Effect on customers | Late vans, shelves short by the afternoon | Closed bakeries on the busiest Saturday |
| Risk for the bakers | Small: little pay lost, easy to keep going for weeks | Large: lost pay, and anger that can cost jobs later |
A work-to-rule is not a strike: Under a work-to-rule the bakers are at work and doing their jobs, so Goldcrust must go on paying them. It cannot stop their pay or replace them for keeping to their own contracts.
That is exactly why the union chose it first: it costs Goldcrust output while costing the bakers almost nothing.
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Goldcrust pushes back: Goldcrust's directors say an 8% rise would add about $14 million a year to the wage bill. They will not pay it.
Employers have their own approaches to a conflict. Each one puts pressure on the employees to accept less.
Four ways Goldcrust can push
Threats of redundancies
'If pay rises 8%, 20 of our least profitable bakeries will close and 300 jobs will go.' A redundancy threat turns a pay dispute into a fear for jobs.
Changes of contract
Goldcrust offers 5%, but only on new contracts with no extra pay for Sunday work and longer shifts in December. Bakers who will not sign by March are told they cannot keep their jobs.
Closure
Goldcrust announces that the Eastfield bakery, where the dispute is strongest, will close for good. Its shops will be supplied from a bakery 20 km away.
Lockout
After the strike, Goldcrust locks the doors of three bakeries for a week. The bakers cannot work, even those who want to, and are not paid. It is the opposite of a strike: the employer stops the work.
Changing a contract usually needs the employee's agreement, and in many countries the law limits how a business can close a site or lock out its staff. So these approaches are often used as threats first, and carried out only when a threat has failed.
What they can win for Goldcrust
- Lower pay rises, so costs stay under control
- Pressure on the bakers to settle quickly: nobody wants to be the one who loses a job
- Contract terms that suit the business, such as longer December shifts
What they can cost Goldcrust
- Lost output and sales: a closed or locked bakery sells nothing
- Bad publicity, customers who side with the bakers, a damaged brand
- Trust destroyed for years: lower motivation, higher labour turnover
What they cost the employees
- Lost pay in a lockout, lost jobs in a closure or redundancy
- Worse terms under a new contract, such as no Sunday pay
- Fear and stress, even when the threat is never carried out
A threat has to be believed: A threat of redundancies works only while the bakers believe it. If Goldcrust threatens and never acts, the next threat is ignored. If it does act, it closes bakeries it needs and loses their sales.
Either way, the bakers remember who threatened their jobs long after the pay deal is signed.
Every approach is a test of who can hold out longer, and every one costs both sides something. Side by side, they look like this.
| Approach | Used by | Cost to the business | Cost to the employees |
|---|---|---|---|
| Collective bargaining | Both | Time; a deal that raises costs | Time; a compromise below the claim |
| Work-to-rule | Employees | Lower output, full wages still paid | Very little: pay is kept |
| Strike action | Employees | Output and sales stop; reputation | No pay on strike days |
| Threats of redundancies | Employer | Trust and motivation fall | Fear for jobs; stress |
| Changes of contract | Employer | Anger, staff leaving, legal risk | Worse pay or hours |
| Closure | Employer | The site's output and sales, for good | Every job at that site |
| Lockout | Employer | No output while the doors are shut | No pay, even for willing staff |
What makes an approach bite: Timing. A strike the week before Christmas hurts Goldcrust far more than one in February.
Can the work wait or be replaced? Fresh bread cannot be baked ahead and stored, and trained bakers cannot be found overnight.
Who can last longer? Bakers with no savings cannot strike for long; a business with cash and rival bakeries nearby can.
The bakers are strong in December
- Busiest month. A fifth of the bread depends on their overtime.
- Nothing to store. Bread baked in November is no use at Christmas.
- Public sympathy. Prices are up 7%, and Goldcrust's profits are up too.
Goldcrust is strong in February
- Quiet month. Less bread is needed, so a strike costs it less.
- Bakers' savings are low after a Christmas with less overtime pay.
- Options. It can supply shops from its other bakeries while one is shut.
How the Goldcrust dispute ended: After the Saturday strike, both sides went back to the table. They settled at 5%, with the Sunday pay kept and no bakeries closed.
The bakers lost a day's pay; Goldcrust lost its biggest Saturday. The approaches were pressure, not answers: the deal still came from collective bargaining.
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How this comes up: Inside a case. A business's employees are unhappy about pay and threaten industrial action at the busiest time of its year, and the business has just won new contracts.
The question: explain two disadvantages for the business of its employees working to rule, for four marks, two and two.
The four-mark pattern
- Name the first disadvantage. Output falls, because nobody works overtime or does more than the contract asks, but the full wages are still paid.
- Show it in this business. A fifth of Goldcrust's December bread is baked on overtime, so its busiest month loses a fifth of its bread at the same wage cost.
- Name a different second disadvantage. It cannot meet a contract, its reputation suffers, or relations with managers get worse.
- Show that one in this business too. The 90 cafés it must supply every morning get late or short deliveries, and the contract is at risk.
Two traps: Two disadvantages that are really one. 'Output falls' and 'fewer loaves are baked' are the same point. Quality and speed are different points; so are output and reputation.
Writing about a strike. Under a work-to-rule the staff are at work and paid. 'Goldcrust loses a day's sales' is a strike, not a work-to-rule.
Explain two disadvantages for Goldcrust of its bakers working to rule.
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