Final answer:
When management offers a much lower pay increase than what it is willing to give during collective bargaining, it is employing a distributive bargaining tactic. This win-lose negotiation strategy aims to claim as much value as possible from a fixed resource, such as salary budgets. This is distinct from other negotiation approaches like integrative bargaining or tactics that may be considered unfair or unethical.
Step-by-step explanation:
When negotiating a new collective agreement, if management offers the union a much lower pay increase than what it is ultimately willing to give, this is generally considered a distributive bargaining tactic. Distributive bargaining is a negotiation strategy that involves negotiation over a fixed amount of resources, such as salary increases. This type of tactic involves each side taking a position based on its wants, needs, and limitations, with each side conceding something until a mutually acceptable resolution is reached. Thinking of it as a win-lose scenario, where each party tries to claim as much of the pie as possible, is helpful.
Unions use their collective bargaining power to negotiate wages that can be above the equilibrium wage, which would otherwise be determined by the intersect of the demand for labor and the supply of labor. However, increasing the wage above the equilibrium level can lead to an excess supply of labor, meaning there are more workers willing to work at the union wage than there are jobs available.
This strategy should not be confused with integrative bargaining, which is a more collaborative approach aiming for a win-win outcome, or with tactics that may be considered unfair or unethical, which are different in nature and can involve deceit or breach of good faith principles.