BARGAINING THEORY

According to John Davidson, wages are determined by the relative

bargaining power between workers and Employers;

Exponents of the bargaining theory are of the view that there should be
upper and lower limits for the rate for the given type of labor.

The wage paid within this range depends on the relative bargaining power
of labour and employers.

The greatest weakness of bargaining theory of wages is its failure to define

the limits precisely.

The upper limit is that rate above which the employer will refrain to hire a
workers, and the lower limit is the rate below which workers refuse to work.
• In construction of the bargaining theories, the vital part played by
organized labour in determining wages has been openly recognized and
given a place of equal importance with that played by the management.

• The actual wage rate which is ultimately embodied in a CB agreement

will depend upon the relative bargaining strength of the employer and
employees.

• CB may be seen as the process through which labour supply and

demand are equated in the labour market.

• It is a system in which the union and the management participate

together to regulate the terms and conditions of employment.
 Types of Bargaining

Walton and McKersie identified four bargaining processes such as:

• Intra-organizational bargaining

• Distributive Bargaining

• Integrative Bargaining

• Attitudinal Bargaining