Why are labor unions interested in financial statements?

Answer 1

· Union members are creditors of companies. Unless they, through their representatives, can understand the financial statements of their companies, how can they receive early warning of companies that are in danger of failing?

· Companies that apply cosmetic accounting are in fact giving warning that their true financial position is worse than what is being presented. Union members, through their representatives, need to be able to identify cosmetic accounting.

· Strong companies are companies that generate sustainable operating earnings. Conventional financial statements do not calculate sustainable operating earnings. Unions need to be able to determine or not whether employers are in fact generating sustainable operating earnings.

· "The main means of regulating trade unions is The Fair Work (Registered Organisations) Act 2009. In exchange for exemption from income tax as well as union dues being tax deductible for members, registered trade unions submit to a number of requirements, including the conduct of elections, annual returns and financial reportsSpecial:Wysiwyg." If members are not able to read & understand the financial statements of their unions, how can they hold their elected officials accountable?

· The recent Health Services Union scandal reinforces the need for union members to understand the operational and financial condition of the union to which they pay their dues. One aspect of this understanding is being able to read and interpret the financial statements of their union.

Special:Wysiwyg"Accountable trade unionism: lesson of the Thomson affair" by Judith Sloan, available at http://www.abc.net.au/unleashed/2859258.html

Answer 2

Answer:Labour unions represent workers, and negotiate on their behalf for wage increases. Labour unions need to know how the financial condition of the company.

The financial statements show the financial position (balance sheet) and performance (income statement). If the firm is wealthy and making (excess) profits, the unions will try to negotiate a bigger piece of 'the pie' for the workers. When the company is not doing well (cash crunch, losses, etc), the topic of discussing may not be about wage increase, but about job security, termination benefits, etc.