If anyone is uncertain about the power relationship between employees and employers, I suggest they look to the Dunnes Stores dispute and the closure of Clerys. These encapsulate the massive imbalance of power in the workplace.
I won’t get into the details of these ongoing disputes. Any rational person hopes the workers succeed – in the case of Dunnes Stores, to win the right to negotiate collectively and reduce the level of precariousness; in the case of the Clerys workers, to be given their fair share of compensation – and dignity – after years of services to the company.
So here, let’s take a step back and look at the presentation of the relationship between employees and employers. This may seem, at first, abstract but it leads us to something fundamental.
It starts with costs.
Labels are powerful things. For instance, costs; this is usually not a good thing: ‘that was a costly venture’, ‘a costly holiday’, a ‘costly day out’. These are things we usually try to avoid, unless the ‘cost was worth it’.
‘Profit’, however, is usually something positive: that was a ‘profitable experience’, I ‘profited’ from that lecture, we are ‘back in profit’. Profit equals growth and prosperity. Further, it is considered a good thing because it’s opposite – loss – is not. Loss is bad for a household, a company, and a voluntary organisation. Continued loss may result in bankruptcy or closure or poverty.
So when we discuss labour and capital in the economy or in a business, we are already using labels that colour the debate: costs and profits. If costs are something to be avoided or reduced in order to maximise benefit, then we must depress the price of labour (i.e. wages and working conditions), and diminish the agencies that champions this ‘cost’ (e.g. trade unions, the collective bargaining power of workers, legislation that benefits workers).
Likewise, if profits are an unqualified good – we should support the agencies that maximise profits and gear our legal, labour and tax framework to that end.
Even before we begin discussing the relationship between wages and profits, the former is considered a cost, a burden while the latter is a sign of prosperity, growth.
The interesting thing about this highly ideological reading, is that it is not vindicated by basic economic accounting (here comes the abstract part).
An enterprise creates income by creating gross value-added. We can measure this by the following:
Gross value-added equals sales revenue minus the purchase of goods and services needed to produce the product the enterprise is selling (rent, accountancy services, machinery maintenance, etc.).
The important point here is that employees’ wages and working conditions is not a cost in the measurement for creating value.