Question

You are responsible for labor relations in your company. During heated labor negotiations, the General Secretary of your largest union exclaims, “Look, this company has $15 billion in assets, $7.5 billion in equity, and made a profit last year of $300 million—due largely, I might add, to the effort of union employees. So don’t tell me you can’t afford our wage demands.” How would you reply?

Answer 1

The profits are not generally to be distributed among the shareholders because it can be reinvested by the company in different projects if the company is focusing on expansion and the growth and profits are not generally accruing to the efforts of only labour department but it is also attributed to efforts of other department as well.

The labour costs are an important cost for the company and there should should be adequate payments but it is not about the profits of the company which is to be distributed to them as the profits of the company will generally be belonging to the equity shareholders of the company and they would be liable to either invest the profits back into the company or distribute them as dividend

So, the profits of the last year is not a guarantee of profits of the present year because the businesses can go through major challenges.