Gib delivery workers may be due for a payday

The New Zealand Herald reported last week:

Workers who deliver hundreds of tonnes of Gib to building sites across Auckland each day are striking for better pay.

About 40 truck drivers and labourers are picketing outside the Penrose base of the delivery company CV Compton.

They want an 11 per cent pay rise, but the company has offered much less...

It took time to train workers to deliver the plasterboard but they often lasted less than a week on the job because it was heavy labour, [Driver assistant James] Ramea said...

Gib was in demand and those delivering the plasterboard were working hard, [First Union organiser Emreck Brown] said.

"Prices of Gib has increased in the last couple of years and this year it has increased significantly. We need some support from the company just to help the members who're helping the company."

In a search model of the labour market, each match between a worker and an employer creates a surplus, which is then shared between the worker and the employer. The share of the surplus (and hence, the wage for the job) will depend on the relative bargaining power of the worker and the employer. If the worker has relatively more bargaining power, then they will receive a higher share of the surplus, in the form of a higher wage.

In this case, there is reason to believe that the workers' bargaining power has increased. That isn't because "those delivering the plasterboard were working hard", or even because it takes "time to train workers to deliver the plasterboard but they often lasted less than a week on the job because it was heavy labour". Those factors likely haven't changed recently.

What has changed is two things. First, the unemployment rate is low. Low unemployment increases the relative bargaining power of workers, because if a worker leaves their job (or refuses an employment offer), the employer then has to start the process of searching for a new worker all over again. The employer would face the search costs of the time, money, and effort spent searching for a worker and evaluating potential matches.

Second, because the "Prices of Gib has increased in the last couple of years", the value that the workers create for the employer have increased. That in itself doesn't affect wages in a search model of the labour market (although it does in a supply and demand model, where the demand for labour is based on the value of the marginal product of labour). However, because the workers are threatening to strike, the costs of the strike to the employer are likely higher because of the high value of gib deliveries foregone. That also increases the relative bargaining power of the workers.

None of this is to say that the gib delivery workers are going to see a huge increase in their wages. Employers tend to retain most of the bargaining power. However, the gib delivery workers have a bit more bargaining power than they would have had until relatively recently, and should be able to leverage that additional bargaining power for better wages and conditions.