Reference no: EM133163792
Twenty-two hotel workers on a small Caribbean island resort earn annual wages of $20,000 each. Ten of them are union members. They think a pay increase is overdue and want an increase of 12 % per annum, effective in August, 2022 (It is now March, 2022). The union has approached management, demanding this increase for all the workers. Management is ignoring the union.
a. What good reason might cause management to ignore this request?
b. What would the total cost of the increase for management be if they were to comply?
c. If, in five years, there were 30 employees, 18 being union members, all still making $20,000 per annum, and management negotiated with the union and agreed to the 12%, but with a choice between either a front-end loaded two-year deferred payment increase with 8% in the first year or a two-year even distribution increase.
Which of the two should be accepted? (show calculations, not just final answers).