NCJ Number
95152
Journal
Three Banks Review Dated: (March 1983) Pages: 3-16
Date Published
1983
Length
14 pages
Annotation
Professor James Meade's 'Almost Compulsory Arbitration Proposal' (ACAP), a device for lowering the equilibrium unemployment rate, is discussed.
Abstract
Meade's idea is that the existing system of collective bargaining between workers and employers be continued; however, in circumstances where there is an unsettled dispute, the strike weapon would be replaced by appeal to an external impartial arbitral body or pay commission. In contrast to the Final Offer Arbitration (FOA) procedure to which Meade's proposal is linked, in ACAP the arbitrator's preferences are laid down with precision as the promotion of employment. The effect in FOA would be dramatic. Bargaining power would cease, and there would be no arbitration. Each party would know that the offer closest to the arbitrator's preferred wage, 'w', would win; hence, any offer other than 'w' would be undercut by the other party. The process places absolute reliance on the arbitrator's judgment. Clearly, if the arbitrator is 'right,' then all is well; problems arise if he is 'wrong.' Thus, ACAP should be rejected in favor of reform of union laws and active antimonopoly action in the labor market. Nonetheless, FOA does have potential uses in restricted circumstances, notably to prevent strikes in sensitive areas of continuing public-sector monopoly and transitionally to enforce interim settlements in labor markets where a Monopolies Commission has produced a damaging report. Thirteen references and two figures are included.