Concession Bargaining - Meaning & Definition

Published by MBA Skool Team, Last Updated: June 07, 2016

What is Concession Bargaining?

In concession bargaining unions give back to the management something it has gained from the management previously like pay rises, work practices, good working conditions and similar other things in return for job security. This kind of bargaining takes place mainly when there is a recession condition in the market.

This is a form of collective bargaining and the term is used frequently in labor laws and it is opposite to all other forms of union –management bargaining where unions demand something from the management. It was coined in the 1980’s.This bargaining is used by labor unions to save jobs during times of recession when there are layoffs by the company. The amount of trust that the union has on the management and the credibility of the management to the union affects the extent to which concessions take place in concession bargaining.

One example of concession bargaining was the concessions on wage and benefits made by the International Union of Electric Workers to General Motors to save 3000 jobs.

There are three types of concession bargaining-integrative, distributive and ultra concession bargaining.

In integrative concession when unions give back some kind of concession to the employer, the employer along with job security also engages in other forms of reciprocating exchange like allowing the unions to participate in decision making, sharing information, engaging employees, profit sharing etc.

In distributive concession bargaining employers make use of hard times in business to allow trade unions to make concessions in their working conditions and pay in return for job security. No concession is granted in participation in decision making or recognition of trade unions.

In ultra concession unions have no power at all. In this form of concession bargaining employers gain a lot of concession from unions and in return they give very few or no benefits to the unions. Also employers turn hostile to unions and try to suppress the unions.

Hence, this concludes the definition of Concession Bargaining along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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