Is the product market important to labor relations? Why or why not?

Labor demand is derived from product demand. Therefore, labor is strongest when product demand is high. The employer's need to fill product demand means it is more dependent upon its employees. In addition, the more productive and profitable the employer is, the greater its ability to offer high pay and better benefits to its employees. On the other hand, when product demand declines, employers have less ability to pay and may look for ways to cut costs that include lay-offs, asking for wage cuts, or dropping certain benefits. Labor's position in this situation is considerably weaker.