Markets and Bargaining power

In almost all cases unequal bargaining power exists. During boom time employees have the upper hand (or in the case of football players or cricketers bargaining between clubs) while during recession time, employers have. The loss of a single employee to a big employer can be said to be the anticipated cost of doing business. Hence cost of losing a job is more for an employee.

I would like to include another perspective looking at the larger picture of markets and bargaining power. Talking of bargaining power in a country like India which has high unemployment and disguised employment, the tilt of the bargaining power is on the employer’s side. Equal bargaining power works when there exists a free market (which is a myth of course).According to proponents of free market economics perfect competition makes sure that neither parties have power over the other and state is a neutral framework and interactions determine the norms of contract. However, since free markets never really exist, unequal bargaining comes to the picture.

The fact that Darrell Hair is taking advantage of the employment contract also points to the issue of the framing of the employment contract. Keeping a few terms in the contract negotiable while a few others non negotiable can be beneficial/ non beneficial to both parties. Thus it is not about how much bargaining power lies with one party but about how much bargaining power each party allows the other to have!