Labor Cost Analysis for Wilson Bros

Instructions

1. Make all calculations, per worker, per hour.

2. Assume a 40 hour work week and 52 weeks per year.

3. If unsure of the format of the Memorandum of Agreement, then use the template provided in your readings. Remember to include all clauses, changes and revisions.

Jim knows the current cost figures but needs to calculate the costs of the union’s proposals.

He will calculate the Average Hourly Wage Rate (AHWR), the Wage Impacted Benefits (WIB) and Non-Wage Impacted Benefits (NWIB) and the resulting Total Compensation Rate (TCR) based on the union’s proposed increases to the existing figures. Later, he will have to calculate the cost of both the pension and safety boot proposals.  And Jim will have to make these calculations per worker, per hour so that he can present senior management with the labour costs that would result from agreeing to such a proposal.  Then Jim will have to calculate a realistic counter proposal.  He has already calculated that using the current figures the WIB equals 15% of the current AHWR and NWIB equals 10% of the current AHWR.

Question 1                                                  

Jim will need to calculate the impact of the 20% wage increase proposed by the union. In order to do this he will have to make the following calculations:-

a-show the impact on AHWR

b-show the impact on WIB

c-show the impact on NWIB

d-calculate the new TCR for Wilson Bros in the first year of the new agreement if the company actually agreed to a 20% wage proposal as presented by the union. (5 marks)

Question 2                                                  

Jim will need to calculate the impact of the safety boot and pension proposal on the non-wage impacted benefit calculation in the first year of the new agreement.  He will assume each employee works a 40-hour week, 52 weeks per year.  Calculate the new non-wage impacted benefit (NWIB that would result from accepting the union’s proposals)? (5 marks)

Question 3                                                  

Jim doesn’t think he can agree to the union’s language on contracting out because as written it could severely limit the company’s flexibility.  What language, if any, should Jim propose to attempt to resolve this issue? (10 marks)

Question 4                                                   

Jim doesn’t think he can agree to the union’s language on technological change because as written it could severely limit the company’s flexibility. What language, if any, should Jim propose to attempt to resolve this issue?  (10 marks)

Question 5                                                    

How should Jim respond to Union Proposals #7, #8, #9 and #10?  (5 marks)

Question 6                                                    

If the parties reach an impasse during negotiations, discuss the process that they must follow prior to a legal strike or lockout scenario. Remember to cite relevant legislation (5 marks)

Question 7                                                    

Negotiations have completely broken down and a Mediator has been appointed by the government to help settle the agreement.  Discuss the Mediator’s final offer of settlement to the parties and draft a Memorandum of Agreement between the parties on that basis. (10 marks)