Bargaining Power Model

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Bargaining Power Model- The Laws of Human Resources Application of the Bargaining Power Model to Evaluate the Outcome of the New York City Transit Employees Strike of 2005

Background: On December 20, 2005 the Transport Workers Union (TWU) called a strike in the city of New York after initial talks to resolve issues on a new contract with the Metropolitan Transport Authority (MTA) failed. The strike was, “Over wage rises, health-care and pension costs and the retirement age of employees.” (BBC News, December 20, 2005) The strike went on for three days and was called off on December 22, 2005. The strike was illegal in the state of New York according to the 1967 Taylor Law that prevents municipal employees from going on strikes. The
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The taxi network in the city was zoned into the four boroughs and operated at flat rates within the zones. Although, these plans worked out to a certain extent the services provided by the transit system could not be paralleled. The irreplaceable position of the transit system provided a better bargaining power to TWA.
3. Relative Costs of Agreement and Disagreement The costs involved were really high. For the MTA, the first day of strike meant USD 400 million loss and the subsequent days would cost USD 300 million each. As for the TWA, they would face loss of pay and additional fines to Union Leaders as suggested by a New York Supreme Court justice. Moreover, both the parties had to pay the price of public opinion and the image of the transit system in the public view for not resolving the conflict and causing problems during the holiday season. In addition, the MTA would incur costs in terms of increased pay, more money in retirement accounts, and increased pension contributions if it had to agree to the demands of TWA.
4. Perception of the Relative Costs Both the parties were well aware of the consequences of agreement or disagreement. The MTA estimated that the requested pension plans and health care plans would cost USD 30 million over a three year period. Based on these perceptions MTA’s strategy was not to change the pension plan, but provide pay increase of 3%, 4%, and 3.5% over the three years that followed, rather than the 6% that the TWA requested. In
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