Unions balancing the financial sector
A new report from UNI Global Union analyses the vital role of trade unions and collective action in managing financial sector risk.
The report investigates the role of organised labour as an internal risk management mechanism in the financial sector. Finance employees have a unique position to contribute to sound corporate governance. Corporate practices with adverse effects on consumers and society very often have similar effects also on finance employees, going hand in hand with, for example, excessive sales targets and risky products.
By analysing recent cases in the financial sector, the report argues that collective action by organised employees has the potential to function as an internal risk control mechanism, for several reasons. Line employees in the financial sector have interests and compensation structures different from those of management and directors, whose interests are more strongly bound to those of short-term equity holders rather than the long-term interests of the bank and its shareholders. Furthermore, the ability to bargain collectively on compensation limits the ability of the firm to push aggressive and risky products through its sales team. In addition, employees who have more control of their work situation are less at risk of job strain and stress, which in turn creates better prerequisites for servicing customers and firms in a sound manner.
The report further explores the way in which finance employees in two firms in the U.S. have acted to mitigate risk through collective action. It finds that there are multiple benefits from collective bargaining for risk mitigation on both firm and macroeconomic levels. Unionized finance employees thereby provides a kind of ”regulation from below” that contributes to an effective check on some of the most unsustainable and risky management practices.
The report in its entirety can be read here.