The “Fall Wage Round”: Collective Bargaining as Temporary Organization

Johannes Lehner

doi:10.5817/cejm2016-2-3

Abstract

By investigating into collective bargaining in Austria, we show that bargaining - two opposing parties negotiating a deal - may take the form of a temporal organization and further, that outcomes of bargaining may significantly be affected by this. We specifically analyze the hierarchy, structure, membership, common goal and common identity of the bargaining organization, as well as its temporal and rhythmic nature. Together this establishes a temporal organization in contrast to bargaining between clearly separated parties. We discuss this as a possible explanation for the widely acknowledged success of the Austrian “Sozialpartnerschaft”.

Highlights

By investigating into collective bargaining in Austria, we show that bargaining - two opposing parties negotiating a deal - may take the form of a temporal organization and further, that outcomes of bargaining may significantly be affected by this
We will show that the special case of collective bargaining as it is undertaken each fall in Austria as “Fall Wage Round” (Herbstlohnrunde), and which is considered as an essential part of its “Sozialpartnerschaft” (Social Partnership), fulfils the criteria of a temporary organization
An economic perspective would explain the engagement in collective bargaining based on transaction costs, which should be expected to be lower if negotiation takes place for a larger group instead between individuals

Summary

Why bargain collectively?

From a pure labour market perspective employers and employees should negotiate salaries and working conditions on an individual basis. Recent empirical studies support this view: German firms with work councils show higher productivity than their counterparts (Müller, 2012) and collective bargaining seems to reduce rent extraction of US-American government employees (Lewin et al, 2012). This suggests certain conditions (e.g. product competition instead of labour market competition) under which investment into collective bargaining instead of individual bargaining might serve the interest of employers, in addition to reducing transaction costs

The structure of collective bargaining processes

Common goal and identity

Temporal Nature

Rhythmic iteration

Findings

Discussion