Collective Bargaining

Meaning
– Collective bargaining is the principle method
whereby employers and employees establish and
continue a relationship
– This is an important means of communication where
– Allows the two sides to get together and talk about
problems, needs, goals and to settle differences

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 Definition

“ A method of determining the terms and conditions of

employment and regulating the employment
relationship between representatives of
management and employees with the intention to
reach an agreement which may be applied to a
group of workers”.

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 Features
 It is a collective process
 Establishes regular and and stable relationship
between the parties involved
 It is a flexible and dynamic process
 It is a method of partnership of workers in management
 It is a give and take approach
 It is an attempt in achieving and maintaining discipline
in industry

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 Collective Bargaining

 The role of conflict in bargaining:

– Bargaining would not occur if there was no conflict
– Parties have different needs, goals, interests,
attitudes, values and perceptions
– These goals are pursued at the costs of the other
party
– If parties have sufficient power then they use
collective bargaining as a way forward

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 Sources of conflict

– Scarcity of resources: availability of money

– Incompatibility of goals, needs and interests
– Different attitudes to work
– Ambiguity in responsibilities and roles
– Poor organisational structure
– Poor communication

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 Sources of conflict

– Most important over: wages and salaries

– Management has to see to shareholder profits and
workers want more money
– Productivity needs may force the firm to operate
flexible work practices and the unions might resist
this
– Companies might want to dismiss inefficient workers
and the union would resist this, demanding job
security

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 Sources of conflict

– Employees might demand shorter working hours,

longer vacation leave and more time off for training
– Employees might insist on stricter health and safety
controls which would be expensive for the company
– Employers demand loyalty to the firm whereas
employees see it as the individual right to change
jobs when the opportunity arises

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 Subject matter of Collective
Bargaining
– The subject matter of CB is very wide
 Rights and responsibilities of the management and
of the trade union
 Wages , bonus , production norms ,leave
retirement benefits and terms and conditions of
service
 Grievance redressal procedure
 Methods and machinery for the settlement of
possible future disputes
 Termination clause

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 Bargaining styles

 Distributive or Conjunctive bargaining

 Integrative or cooperative bargaining
 Productivity Bargaining
 Composite Bargaining

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 Bargaining styles:

– Distributive bargaining: this is the most

common type
– Management and unions are in opposing positions
and gain for one is a loss for another
– Antagonism dominates the bargaining items
– These would be around wages and conditions of
employment

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 Bargaining styles:
 In distributive bargaining power is used as part of the
strategy and tactics on both side
 Each party strives towards an outcome that is
favourable to its own side
 Both parties are thus assessing strengths and
weaknesses on both sides
 Both parties are looking to how much they can push
the other party
 Each party assesses its ability to withstand being
pushed

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 Bargaining styles:
 Integrative Bargaining
– This is when both parties want a successful
outcome and there is a genuine desire to solve a
problem
– For Eg : Decisions taken when the the entire industry is
in threat Like Global Recession
– In integrative bargaining items are seen as
problems that need resolving
– Integrative bargaining strives for a win –win situation
– Conflict is minimized

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 Bargaining Styles
 Productivity Bargaining
– In this method, workers’ wages and benefits are linked
to productivity.
– Initially, a standard productivity index is finalized
through negotiations.
– This index is not fixed at an exceptionally high level.
– Workers crossing the standard productivity norms will
get substantial benefits.
– This method of bargaining helps in making the
workers realize the importance of raising productivity
for organizational survival and growth.

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 Bargaining Styles

 Composite Bargaining
– Workers tend to argue that productivity bargaining
increases their workload. As a result, workers tend to
favour composite bargaining

– In this method, labour bargains for wages as usual.

– In addition, they also bargain for such issues that, if

permitted
 Eg. Workers demand further equity in matters
relating to work norms, employment levels,
manning standards, environmental hazards, sub-
contracting clauses, etc.

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 Bargaining Styles
– We see that workers are no longer solely interested in
the monetary aspects to the exclusion of work related
matters.

– Through composite bargaining, unions are able to

prevent the dilution of their powers and ensure justice
to workers by putting certain limits on the freedom of
employers.

– For the employer, this is the lesser evil when

compared to strikes and lockouts.

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 CBA of Volkswgaen & I G Metall
 Volkswagen and IG Metall agreed collective bargaining
milestones for the six traditional plants during their negotiations
 The central element is a standard working time of up to 34 hours a
week without more pay.
 A new, attractive profit sharing model for the workforce was
developed.
 Production volumes for each of the plants have been determined
 Safeguarding capacity utilization and thus jobs.
 The envisaged term of the agreement is January 1, 2007 until the
end of 2011.

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 Emerging Issues in CB

 Performance based Bargaining

 Women's issues
 Job security
 Productivity
 Quality of Work life

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 Collective Bargaining Outcomes:
– The outcome of a collective bargaining process is
an agreement
– There is usually an agreement to bargain regularly
over wages and other conditions of employment
– Agreement can stipulate a time factor to the
agreement, for e.g. wage increase for one year only
or for a number of years

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 Outcomes

 All agreement are enforceable by law.

 All parties are bound to the terms and
conditions set out in the agreement.
 While parties cannot withdraw from and
agreement, clauses can be inserted to allow for
conditional withdrawal.

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 The Milestones in Industrial
Harmony : TISCO
 1934: Profit sharing given for the first time in India.
 December 9, 1938: Labour Association registered in the name of
Tata Workers' Union.
 1942: Tata Steel employees through representation of leaders of Tata
Workers' Union join Quit India movement.
 January 8, 1956: Comprehensive Agreement between Tata Steel and
the Tata Workers' Union broke new ground in collective bargaining
and workers' participation in management.
 1959: A new Agreement is signed between TWU and Tata Steel to
implement a new wage structure.
 Agreements continue to strengthen bonds of industrial harmony in
1965 ,1970,1975,1999,2001
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