The right and the wrong way demanding fairness on your job

Today I learned that some coal mine workers went on strike demanding higher pay. They say that a few other coal mines are paying better salaries than their mine and they have had it enough, so they started a strike. The miner’s public relations team issued a statement basically saying that they have 14,000 workers and only 400 of them are on strike, but since those 400 worker are blocking others from accessing their workplaces they do not work as well.

I think organized labour is a really bad idea. It doesn’t matter what type of labour it is. You can have some sympathy to coal miners, after all, the job is not very pleasant and quite dangerous. I have such sympathy as well, but… Strike is a wrong way achieving fairness in anything, including higher wages.

There are few problems with strikes. The main one is that it simply doesn’t lead to a good solution. Let’s examine why workers are ‘underpaid’:

1. Greed.

I don’t believe any employer is underpaying workers just because this employer is greedy. Why? Because everyone is greedy to some extent. Greed is not the only emotion in this situation. Greed is balanced out by fear. A fear that ‘underpaid’ employees will quit and join some other employer leaving their current employer holding the bag. Remember, the employer is likely to be in debt. All big enterprises are in debt. They always need financing. What happens if people just walk away and the employer is no longer able to hire anyone for the poor salary it offers? Well, the production will halt, cash inflow with dry out and banks will be on the phone demanding their money back exactly at the time when you don’t have any. Finally the firm goes bust, assets are auctioned off and acquired by other entrepreneurs, and the money is paid to bankers leaving current owner with nothing. This is a natural deterrent to greed. A fear to go bust.

2. Too many redundant workers

This is quite unnatural for businessmen to keep big amount of non-utilized labour resources. Remember, that they are greedy? So, why they would pay to people that don’t do anything? It is quite likely that employer will decide to pay more to employees by laying off some significant number of employees to save money. Save money on non essential things like… safety. Or something else. So the work conditions will not improve very much or the rest of employees will have to work more.

3. Workers are poorly equipped with tools

Well, this might be a consequence of a large number of redundant workers, then see above. It also might be because of lack of investments on a part of the owner. It can’t be greed however, because it is unnatural for owner not to invest in a profitable enterprise because of greed. Usually people invest precisely because they want a better return (they are greedy, they want to make more money). So underinvestment could only happen when the enterprise is doing so poorly, so it doesn’t have any resources to invest. How the strike can change that? It can’t.

4. Workers don’t have any skills to leave the company in persue of a better pay

Well, that’s where greed kicks in. Ha-ha, I’m a businessman! I know those suckers will not leave because they are not employable. So screw them! I don’t think strike will help here long term. If the business is based on dumb employees who don’t know a thing, this business will either fail or will eventually significantly cut back on labour force (after significant capital investment). Strike can only speed these outcomes up, and if you’re an employee with no marketable skills… This is not a good news for you.

So, the strike is not a solution. What is a solution? The solution is to quit. Not to strike, but to quit. If you can find a better pay — go and find one. If you can’t — educate yourself and try again. People quitting a company send the right market signal to the business owner. He or she will have to react sooner or later to do something about it. And if employer can’t or will not do anything, why do you want to continue working there? I think you really don’t. No violence, no conflict. You quit and you improve the economy and your personal financial situation by engaging yourself in a more productive activity.

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10 Responses to The right and the wrong way demanding fairness on your job

  1. Quitting sounds good in theory… However in practice these mine workers usually live in small towns, where there are not many other employers. So, you would say they should relocate, but there are two major problems in that option:
    – property prices are very low in small towns with no good employers, therefore it is not an option to sell their property there and buy something in an economically developed city/region
    – mine workers usually do not have a good education. They grew up in their small town, started to work at a mine after high school or a crappy college. It means that majority of them cannot compete with people living in a big cities because of their bad education.
    As you probably know, it is common that an unskilled job does not provide enough for renting an apartment. What we have: uneducated man, with no money, living in a small town.

    If a mine worker young enough and has no family there is a chance to move to a big city and to start a new live. But for those who have families and children it is almost impossible. That is why it is very common that a government gives money, pays for relocation and housing, and pays for education of the mine workers when their mine is closing.

  2. Why there is no “edit comment” link? Sorry for stupid mistakes

  3. Well, you’re quite right that quitting a shitty coal mine for all of 14,000 workers there is not going to be easy. However, there are few points:

    First, as these guys say, other mines pay better. So, for some it could be viable to change their employer without moving that far. Of course, not for everyone (and the coal industry is currently depressed), but I still think there are some open positions in other mines at least from time to time.

    Second, it is hard, but it is not going to be easier going forward. What do you think these miners should wait for? Should they wait for mine depletion, so all of them are subject to a big lay-off? Should they wait for their children to start working in the same coal mines so they are all trapped now? I just don’t think what all these 14,000 people should be waiting for before they finally start working to solve this difficult situation.

    Well, finally, coal miners is one situation, but there are many others. Teachers, airplane pilots, dispatchers etc. Many of these guys actually work in large cities, so they have better chances to change their career. For instance, I would never ever understand teacher on strike because if it is a really good teacher, he or she are fully capable to work in private sector and make 2-3 times more that in public one (my wife does so, she is a private English tutor).

  4. Usually there is only one or two mines near a small town. Other mines with better wages are located near other towns with property prices much higher (because economy of these towns in a better shape).

    If I were a miner with a family and children, the best practical strategy would be the following:
    – send children to a college\university in a big city. In average universities tuition fees are not so high, so even a miner can pay for education of his child. In many countries governments help to pay for education. Living conditions are not so important for a student, she/he can live in a college hostel.
    – try to find other sources of earnings in my small town. Many people do this. But usually this is not so easy because almost everyone in the town try to do this.
    – wait for depletion of a mine or a big lay-off. In most cases, the government will give money for relocation, or the government will press the mine owner to do so. This is why in many cases people do not quit themselves – they know that in case of a lay off they will get significant sum of money.

    I think you analysis does not consider all “players”. You depicted only employees and employers. In practice there are additional sides: governments, municipals. If you consider them it might be that a strike makes sense: e.g. government will press the mine owner to increase wages, or will subsidize the mine or the whole industry. I know that you do not like this situation (interference of the government) but it is what it is.

  5. This can probably work in say… Canada or Australia, but not Russia or Ukraine. Do you really think government in Ukraine will subsidize the whole industry while they are running SMS fund rising ads to get their military equipped? Or similarly in Russia, when the most regions are running red ink except 10 richest regions? I wouldn’t hold my breath waiting for a lavish subsidy. Furthermore, when the mine is almost depleted, the property prices nearby will collapse. And of course, if the government will be forced to provide these people with jobs, do you think these jobs will be great? I don’t think this way.

    So.. you propose a risky plan.

    But I like ideas about extra source of income and sending kids to a schools in big cities.

  6. I know several people from small towns of east regions of Russia who recently received a “government housing certificate” (a document that guarantees that the government will pay up to certain sum of money when this family buys a house or an apartment in other regions). Not sure how it is widespread though.

    I bet there will be more strikes in Russia if (when?) the economy shrinks (though mass media will not report this). In economy is really bad, people come on the streets not because of some clever calculation, but because they are in dispair and do not know what to do

  7. Alexey, you’re damn right that a strike is not a solution. However, you live in a huge city, you’re high educated and skilled professional, and your job is in high demand all over the world. However, the reality is:

    • very often mines are located in tiny villages (around 1-2k of population)
    • the closest mine is in 10-15 km, and it’s a huge distance for a 2k village, especially if you don’t have a public transport. And usually it’s around 5-6 mines overall in a range of 30 km.
    • please, don’t think that a labor market for coal miners is competitive. It’s not US, Canada or Europe. Usually, all coal mines in a range of at least 100 km are owned by the same person, so usually the only reason of higher pays is – a dangerous. Or radiation

    Unfortunately, usually the only “escape” for these people is to send their children to a big city for education.

    I never understood those people who strike in big cities (or this strike in CIC). Indeed, you have so huge labor market, why in the hell you don’t go anywhere else? However with coal miners everything is not so easy, especially in Russia/Ukraine – it’s not a market at all.

    • Government workers should not be allowed to strike for a number of reasons:

      1) They are negotiating with a bunch of other government workers, not business owners, and these government workers are paying taxpayer’s money (not their own money)
      2) We are forced to use government services. I don’t care if Starbucks employees are on strike, because I can buy a cup of coffee somewhere else. But with the government services I don’t have an alternative. I have to wait until the strike is over and then pay more in taxes to pay salaries to these bastards. That really looks more like blackmail, not a strike.

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