Labour relations and collective bargaining

Trends in collective bargaining

coverage:
Stability, erosion or decline?
 What is Collective Bargaining?

Collective bargaining is a fundamental principle and

right at work. It is a key feature of industrial
democracy.

It refers to all negotiations which take place between

an employers and their organisation on one hand and
trade unions on the other for the purpose of :

1. determining terms of employment typically

wages and working time , working conditions,
work holidays, sick leave, vacation time,
retirement benefits and health care benefits

2. regulating relations between employers and

workers

The Collective Bargaining Agreement is the result of

an extensive negotiation process between the parties.
 Importance of Collective Bargaining
To the employees
• It increases the strength of
the workforce, thereby,
increasing their bargaining
capacity as a group.
• It restricts management’s
freedom for arbitrary action
against the employees.
• The workers feel motivated
as they can approach the
management on various
matters and bargain for
higher benefits.
• It helps in securing a prompt
and fair settlement of
grievances.
To the employers
• It becomes easier for the
management to resolve
issues at the bargaining level
rather than taking up
complaints of individual
workers.
• Collective bargaining plays
a vital role in settling and
preventing industrial
disputes.
 Proportion of workers covered by Collective
Bargaining
 Collective bargaining coverage is the extent to
which the terms of employment of workers are
influenced by collective negotiation.
 The coverage rate represents the ratio of
employees covered by a collective agreement to
the total number of employees in a firm.
 This coverage rate indicates how inclusive
collective bargaining is in providing labour
protection to the employees
• The article provides data on collective bargaining coverage
for 75 countries indicating significant variation such as:
 In countries like Ethiopia, Malaysia, the Philippines and Peru
merely 1 or 2 per cent of employees are covered by collective
agreements.
 In countries like France, Belgium, Austria and Uruguay the
coverage of collective bargaining is nearly 100%.
 Very low levels in: Turkey, the United States, the Republic of
Korea and Mexico.
 Medium-low levels in: Japan, Canada, the United Kingdom
and South Africa.
 Medium-high levels in: Brazil, Germany and Australia.
 High levels in: Italy and France.
 In countries like The United States, United Kingdom, Canada, data is collected from household or
labour surveys which contain questions about collective bargaining.
For most countries, however, data collection depends on administrative data, and estimates, provided
by labour ministries, employers’ organisations, trade unions or joint councils.
• The data which has been provided in the article
showcasing the collective bargaining coverage
as a share of total employment and as a share
of employees maybe altered for the reasons
that some workers especially workers in the
public services, may not have the right to
bargain collectively over wages as it may be
determined by state regulation or consultation
methods.
Coverage rates calculated as a proportion of total
employment (broad) are always lower than
coverage rates calculated as a proportion of
employees (narrow).
The difference is large in countries like:
• Zambia (6 versus 38 per cent)
• Venezuela (7 versus 13)
• Brazil (42 versus 65)
• Albania (10 versus 24)
• Greece(22 versus 40)
• Portugal (50 versus 67)
• Italy(60 versus 80)
The above chart provides data on coverage rates of men and women
respectively – that is male and female coverage as a proportion of male and female
employees. There is very little difference in the rates for men and women,
particularly where collective bargaining agreements are more inclusive.
Is the variation in coverage rates due to
the difference in Unionization rates?
 When more workers are members of unions, the expectation is that
more of them will be covered by collective agreements. However this
is not absolutely true in all the cases.
 Trade Union density corresponds to the ratio/proportion of employees
that are members of trade unions divided by the total number
employees in the firm.
 The article also provides data on union density and bargaining
coverage rates for 60 countries and a comparison is made between
these two indicators.
 It is observed that countries like France, Austria, and Uruguay have
high collective bargaining coverage and low union density rates.
 While countries like Armenia, El Salvador, Malaysia have relatively
high union density rates and low collective bargaining coverage.
There are four potential reasons for some countries having union density
rates which exceed collective bargaining coverage by a great margin that
is:
1. Measurement errors caused by administrative arrears in union
membership data. Errors in reporting data and deriving data from
multiple sources may falsify the real scenario.
2. In public services, methods other than collective bargaining such as
public service consultative bodies may be used to determine wages
and working conditions of the workers.
3. Some unions may believe that their fundamental role is to
administer workers with social security and influence the actions of
the government (political lobbying) rather than collective
bargaining.
4. Finally, the management may be against collective bargaining as a
whole , making it difficult for unions to gain worker membership
that will help them to be recognised as a lawful body for
undertaking the purpose of collective bargaining.
• In 47 countries, the coverage rates exceed the union density rates, of
which in 15 countries coverage rates exceed union density rates by
more than double the amount.
• The explanation for this may be that , some employers have got into
an agreement with the union and the terms and conditions of the
signed agreement is applied to union members as well as non-
members. In countries like USA, Brazil, Japan, Belgium it is
necessitated by the law for employers to sign such an agreement
with the union.
• In order to reduce rivalries and disputes at workplace, and also to
lower the need to join a union, some employers will apply terms and
conditions of a collective agreement to all the workers.
• In the 15 countries, where coverage rates exceeds union density by
double the amount, here collective bargaining takes place at a
Sectoral or National level. Some sectors like retail, hotel and
catering, cleaning is not unionized and this may be the reason for
coverage rates doubling union density rates.
How does bargaining coverage relate to the level of bargaining?
 The level of bargaining is the most
important factor that can predict the
bargaining coverage.
 The various levels of bargaining are
National, Sectoral and Enterprise
bargaining.
 The article mentions about two structures
of bargaining as well.
 Under single-employer bargaining each
employer bargains independently with the
trade union.
 At the enterprise level, single employer
bargaining may cover only a limited
number of employees normally those in
large and medium enterprise units.
• In the paper, data is provided about 25 countries, where the
coverage rates vary from 1% and 35% when the bargaining takes
place at the enterprise level. Countries like the U.K( health service
sector), Ireland(construction sector) , Canada have a coverage rate
of 35% here employers still negotiate jointly in some sectors.
• Multi-employer bargaining at the sectoral or national level is the
most inclusive form of collective bargaining. It is a common
labour practice and refers to a unit structure when a number of
employers join forces for purposes of collective bargaining. In
such a bargaining structure, the coverage rates vary from 49% in
Switzerland to 98% in France and Austria.
• An average 76.8 per cent of employees are covered by collective
bargaining agreements in 19 countries where collective bargaining
is at the Sectoral or National level
 How has collective bargaining coverage changed since the
recent economic crisis?
During 2008 to 2013 in 48 countries there has been a :
 Decline in bargaining coverage of 4.6%
 Decline in union density of 2.3%
During the Great Recession: ( Expansion)
• In Australia there were changes in the procedural rules where
more support was provided to collective bargaining.
• In Netherlands collective bargaining expanded into new sectors
and collective agreements were extended (cleaning, services,
safety, etc.)
• In Switzerland and Norway, the public authorities made greater
use of the extension of collective agreements to protect vulnerable
workers, especially in sectors with predominantly small
businesses and those employing a high proportion of migrant
labour.
During the Great Recession (Stability)
 In France, Italy, Canada, Austria and Belgium, bargaining
coverage remained stable.
 The reason for the stability observed is:
 The continued willingness of employers’ organizations and
trade unions to negotiate with each other – and to act as social
partners in the regulation of labour markets.
 During the crisis, Collective bargaining played an important
role in negotiating “job saving” agreements.
During the Great Recession ( Erosion)
 In countries like Spain, Greece, Israel it became difficult to
renew the existing collective agreements during the recession.
 In Romania , Ireland, Greece policy changes were made on the
extension of collective agreements and the National Pay
Agreement was cancelled.
• Bibliography
• ORGANISATION, I. L. (2018, FEBRUARY). INDUSTRAIL RELATION DATA ON
COLLECTIVE BARGAINING. Retrieved OCTORBER 2019, from GOOGLE:
https://www.ilo.org/global/topics/collective-bargaining-labour-
relations/WCMS_408983/lang--en/index.htm
• VAIBHAV.V. (2017). ECONOMICS DISCUSSION. Retrieved OCTOBER 2019, from
GOOGLE: http://www.economicsdiscussion.net/collective-bargaining/collective-
bargaining-definition-types-features-and-importance/31375
• Visser, J. (2016). JOURNAL OF LABOUR POLICY. Retrieved OCTOBER 2019, from
GOOGLE: https://izajolp.springeropen.com/articles/10.1186/s40173-016-0061-1