Bargaining Structure Research Articles

The Rhetoric and Reality of Bargaining Structures Under the Howard Government

Bargaining structures have been a central issue in policy debates of recent years. This paper seeks to explore both the ambitions of the Howard Government, through its rhetoric on bargaining structures, and the real impact of the Workplace Relations Act on bargaining structures in Australia. The main conclusion is that the government has been more successful in changing bargaining structures than previously thought.

Globalization and the future of central collective bargaining: the example of the German metal industry

The paper deals with the relationship of the German model of capitalism and the role of centralized collective bargaining within it. It is assumed that the system of central wage bargaining - leading to a relatively egalitarian wage structure and the absence of a non-union wage sector - is one of the major pillars of the national institutional framework of the German economy. Pressures towards the decentralization of collective bargaining will therefore not onlyy affect the distribution of wages and the patterns of social equality, but also have a profound impact on the functioning of the German model of capitalism. The first part of Paper links the system of collective bargaining and industrial relations with the wider macro-economic and political features of German capitalism. It defines three major challengers to the institutional framework of the German economy: structural challenges since the early 1970s, the impact of unification since 1989 and the impact of European integration and globalization since the mid-1980s. It concludes that not globalization as such but a complexity of different pressures might lead to drastic institutional changes. The second part of the paper analyses collective bargaining development in the metal industry in the early 1990s. It looks at the conduct of the bargaining rounds, the institutional set-up and the position of the collective bargaining actors respectively. It will be argued that collective bargaining in the German metal industry has become extremely pressurized in the early 1990s. We argue that pressure on collective bargaining stems from two sides: first, from thhe membership problem of trade unions and employers' associations and, second, from the narrowing scope of flexibility within the give system of wage determination. We will define three ways of achieving wage differentiation within and outside centralized bargaining structures and look at their changing role during that period. Finally, the paper presents two scenarios of collective bargaining in the future and discusses their implications for the German ecnomic model

Centralization and strikes

Existing models of the effects of bargaining structures on bargaining outcomes have not, to date, incorporated the social learning which occurs when a sequence of union-firm pairs bargain over wages. In this paper, we explore the effects of centralization in bargaining along three dimensions – formation of a national union, formation of an employer association, and the movement from sequential to simultaneous negotiations – using a model which allows such learning to occur. The predicted effects of centralization on wages and strikes are complex, depending on both the dimension in which it occurs, and on the pre-existing level of centralization in other dimensions. Interestingly, however, under no circumstances does the model unambigously predict a decrease in strikes with centralization.

The wage bargaining structure and the inflationary bias

The failure of some disinflation programs has been associated with their inability to bring wages down with other nominal variables. This issue is analyzed in a model with many trade unions. The inflationary bias that characterizes the one-shot game equilibrium is an increasing function of the gap between the unions and the government real wage targets. This gap, in turn, depends on whether sectoral unions cooperate or set wages separately. A non-inflationary cooperative equilibrium can be sustained as a subgame perfect and weakly renegotiation proof equilibrium in the infinitely repeated game, provided the unions are sufficiently “patient.”

The Influence of Industrial Relations Factors on U.S. Foreign Direct Investment Abroad

Although managers of multinational companies have identified labor practices and regulations, access to skilled labor, and similar factors as important considerations in foreign direct investment decision-making, few studies have empirically examined the influence of industrial relations factors on foreign direct investment. Applying a transaction costs framework to U.S. Department of Commerce data published in 1992, the author examines the influence of several key industrial relations variables on U.S. foreign direct investment across nine industries and nineteen OECD-member countries. Across the countries studied, U.S. foreign direct investment was negatively affected by the presence of high levels of union penetration, centralized collective bargaining structures, stiff government restrictions on layoffs, and pervasive contract extension policies; it was positively affected by high levels of education and policies requiring works councils.

The Influence of Industrial Relations Factors on U.S. Foreign Direct Investment Abroad

Although managers of multinational companies have identified labor practices and regulations, access to skilled labor, and similar factors as important considerations in foreign direct investment decision-making, few studies have empirically examined the influence of industrial relations factors on foreign direct investment. Applying a transaction costs framework to U.S. Department of Commerce data published in 1992, the author examines the influence of several key industrial relations variables on U.S. foreign direct investment across nine industries and nineteen OECD-member countries. Across the countries studied, U.S. foreign direct investment was negatively affected by the presence of high levels of union penetration, centralized collective bargaining structures, stiff government restrictions on layoffs, and pervasive contract extension policies; it was positively affected by high levels of education and policies requiring works councils.

Wage formation under union threat effects: Theory and empirical evidence

Trade union activity may have an impact on wages outside the bargaining sector through threat effects. In this paper, a model of wage formation with endogenous bargaining structure is developed. We show that in firms with low union density, no local collective bargaining arises and the wage outcome equals the reservation wage. For higher density levels, the union threat is effective and the wage level is higher than the reservation wage even if there is no collective bargaining at the firm level. An empirical specification of the model is derived and fitted to establishment-level data for the Italian metal-mechanical engineering industry. Empirical results suggest the presence of endogenous selectivity in the choice of the bargaining regime, and confirm the existence, according to local union density, of different wage determination patterns. Threat effects are shown to be particularly relevant for establishments with an intermediate level of union density.

Public Sector Earnings and the Extent of Unionization

Many studies have examined the influence of union density (union members as a percentage of all workers) on earnings in the private sector, but few such studies have looked at the public sector. Using data from the 1991 Current Population Survey, this study estimates the determinants of earnings for state and local government employees in both the union and nonunion sectors. The extent of public sector unionization appears to be positively correlated with earnings for both state and local government workers and for those covered and not covered by collective agreements. Although the effect for non-covered employees is smaller than that for covered employees, both effects are larger than those typically found in similar estimates for the private sector. The authors also find that bargaining structure has some influence on earnings, with the most consistent effect being a positive influence of arbitration on the earnings of local government workers.

Diverging Male Wage Inequality in the United States and Ganada, 1981–1988: Do Institutions Explain the Difference?

The U.S. and Canadian economies have much in common, including similar collective bargaining structures. During the period 1981–88, however, although both countries witnessed a decline in the percentage of workers belonging to unions and an increase in hourly wage inequality, those changes were much more pronounced in the United States than in Canada. Using data on men in Canada and the United States in 1981 and 1988 (from the Labour Force Survey and supplements to the Current Population Survey), the authors study the effect of labor market institutions on changes in wage inequality by computing simple counterfactuals such as the distribution of wages that would prevail if all workers were paid according to the observed nonunion wage schedule. Their results suggest that much more severe declines in the unionization rate in the United States than in Canada account for two-thirds of the differential growth in wage inequality between the two countries.

Diverging Male Wage Inequality in the United States and Canada, 1981-1988: Do Institutions Explain the Difference?

The U.S. and Canadian economies have much in common,including similar collective bargaining structures. During the period 1981-88, however, although both countries witnessed a decline in the percentage of workers belonging to unions and an increase in hourly wage inequality, those changes were much more pronounced in the United States than in Canada. Using micro data on men in the United States and Canada in 1981 and 1988, the authors study the effect of labor market institutions on changes in wage inequality by computing simple counterfactuals such as the distribution of wages that would prevail if all workers were paid according to the observed nonunion wage schedule. Their results suggest that changes in unionization rates and minimum wages account for two-thirds of the differential growth in wage inequality between the two countries.

Improving the Process of Constitutional Reform in Canada: Lessons from the Meech Lake and Charlottetown Constitutional Rounds

AbstractThis article explores ways of improving Canada's constitutional reform process by systematically comparing the strengths and weaknesses of the Meech Lake and Charlottetown constitutional rounds during three phases: agenda-setting, elite negotiation and ratification. The objective is to draw lessons from these experiences for future attempts to achieve formal constitutional change. The author argues that both the Meech Lake and Charlottetown processes were seriously flawed, but in rather contrasting ways. The Meech Lake process was too closed, narrowly representative and tightly controlled by government elites. The Charlottetown process was poorly managed. It lacked focus, economy and coherence in agenda-setting and selection of items for negotiation, and integration and unified leadership in its elite bargaining structures and processes. The consultative referendum used in the Charlottetown process operated successfully, but still needed organizational fine-tuning and more effective meshing with established ratification procedures. What is required is a more finely balanced and closely integrated “blended” process of parallel elite and citizen-based consultative and participatory structures operating in all phases of the constitutional process. Within this framework, the author offers a comprehensive list of proposals for addressing and overcoming the shortcomings of earlier constitutional reform efforts.

Wage bargaining with incomplete information in an unionized Cournot oligopoly

We develop a model of wage determination with private information in an unionized oligopolistic industry and we use it to compare the outcome of collective bargaining under two different bargaining structures - one in which a single wage is bargained at the industry-level and one in which the wages are bargained at the firm-level. The bargaining process is described by Rubinstein's alternating-offer bargaining model with two-sided incomplete information about the bargainers' discount rates. Iterative elimination of strictly conditionally dominated strategies for games with incomplete information leads to bounds on the payoffs which may arise in the game and to bounds on the wage agreements that may be made. Moreover, the perfect Bayesian equilibria payoffs and wages conform to these bounds. The main results are: firm-level wage outcome is not necessarily lower than industry-level wage outcome; potential inefficiency (hence, possible strike activity) is larger when bargaining takes place at the industry-level.

UNION-OLIGOPOLY SEQUENTIAL BARGAINING: TRADE AND INDUSTRIAL POLICIES

This paper considers the efficacy and the desirability of home government tariff and subsidy policies when labour market structure and asymmetries in the firms' size matter. In a Cournot-Nash duopolistic sector, a unionized home-firm competes against a non-unionized foreign firm. The home firm-union choose wages and employment in a two-stage Nash bargaining game. The second stage corresponds to the Cournot-Nash game with the foreign firm. Firms may play in strategic substitutes or complements. As the home bargainers recognize that market shares are determined by relative marginal costs, they may use the wage stage strategically. Home government policy choices critically depend upon the bargaining structure and general equilibrium spillovers. Copyright 1996 by Royal Economic Society.

Trade unions in Greece: change and continuity1

Trade unions in the Greek system of industrial relations (the system of wage and employment regulation, the bargaining structure and behaviour) have shown signs of change and modernisation since the late 80s and the early 90s. The question is whether the model of industrial relations that was dominant in the 70s and 80s, (state-controlled compulsory arbitration, conflict-oriented collective bargaining, political-party-dominated trade-unionism) has given way to a modem model of industrial relations (development of bipartite regulation, consensus-oriented collective bargaining, more union independence vs. the state and the party rivalries). To explore the prospects of modernisation of Greek trade unions we will discuss changes in the bargaining behaviour (content of collective agreements, strike activity, performance etc.) and the bargaining structure at the national, branch and company level. The role of new labour legislation in modernisation is also discussed. The influence of the Delors initiative for European social dialogue is taken into account as a factor that shaped the behaviour of the major social partners in Greece. The prospects for modernisation are finally evaluated in the context of the restructuring of the Greek labour market and the difficult convergence criteria for Economic and Monetary Union (EMU). The process of modernisation is taking place in conditions of rising unemployment, increasing labour market segmentation, real wage cuts and deindustrialisation, which may buttress elements of continuity in Greek industrial relations.

The Metal Trades Industry Association, Bargaining Structures and the Accord

As part of his more general argument about employer reactivity in Australia, David Plowman has asserted that the disunity of Australian employer associations has inhibited their success in initiating policy debates or strategically reshaping bargaining structures. However, this paper, in examining the industrial relations strategies and policies of the Metal Trades Industry Association under the Accord, argues that the association seized substantial initiative in policy debates relating to bargaining structures and in influencing the pace and direction of change regarding the progressive implementation of enterprise bargaining in Australia. This had nothing to do with unity or disunity among employer groups, but related to factors internal to the association, its industry-and, in particular, the associa tion's evolving relationship with the industry's unions-and to circumstances regarding the public policy-making process.

Trade Union Behaviour, Pay Bargaining and Economic Performance

Part 1 Can political models predict union behaviour?, Robert J. Flanagan: trade unions - models and institutions classical voting models and union behaviour the descriptive power of the median voter model institutional structure and voting outcomes union leaders and union members a stocktaking comment, Alistair Ulph comment, Assar Lindbeck. Part 2 Bargaining structure and economic performance, Karl Ove Moene et al: wage demands by unions and employers bargaining models of wage-setting conflicts over the level of bargaining comment, Assar Lindbeck comment, Lars Calmfors.

Bargaining and Waiting

Until recently the final word on bargaining with full information had been Rubinstein's (1982) seminal work which concluded that an agreement will be reached immediately, and the first mover will have the advantageous share. Rubinstein's model was one of alternating offers made at fixed time intervals. Many variations of the model have emerged, and until recently, they mainly focus on asymmetric information' with some having the uninformed agent making all the offers. The conclusion from examining these variations is that the equilibrium is highly sensitive to the exact specification of the institutional structure. In more recent work, Perry and Reny (1990), Perry and Reny (1993), Sakavics (1993), and Nickerson, Sadanand and Sadanand (1994) endogenize the structure of the bargaining by allowing the order and timing of play to be determined endogenously. The first three papers (endogenous structure models) deal with the full information setting and the last is an asymmetric information model.2 In addition to the exogenously given minimum reaction time (for responding to offers made by the other player), the endogenous structure models introduce the important innovation of an exogenous waiting time, a time between a player's offer and his next offer. They also allow players to make simultaneous offers which Sakovics later disallows. The findings in this recent literature are rather startling: (i) The waiting time has a profound impact; the longer the time, the greater the share the player can command.3 (ii) The consequence of simultaneous offers is multiple equilibria: when the reaction time is zero, a continuum of shares lying between the two unique Rubinstein shares can result, and additional continua of shares arise with delayed agreement when the reaction times are positive. (iii) Equilibrium paths are almost exclusively characterized by simultaneous offers. In this paper we examine the question of simultaneous offers and reconcile the conflict between the infrequency of simultaneous offers in real life bargaining and their prevalence in the endogenous structure models. We

Multi‐union Collective Bargaining Structures in South Africa: Case Studies

Les AA. etudient l'evolution du systeme de negociation mis en place en Afrique du Sud. Ils examinent la legislation et les relations industrielles dans ce pays a partir de 1924. Ils rappellent qu'en 1979 une «Cour Industrielle» a ete creee afin de resoudre les conflits qui pouvaient survenir en matiere sociale au sein des entreprises, des organisations. Ils mettent en relief une reconnaissance progressive des syndicats dans ce pays. Ils proposent une etude des relations sociales au sein du «Durban City Council», une administration locale, et au sein du «Department of Health of the KwaNgwane Government» qui gere les etablisements de sante de l'est du Transvaal. Ils s'efforcent de comprendre le role et les mecanismes de la representation dans le cadre des negociations conduites au sein de ces organisations

Labour Market Adjustment and Women in the Service Industry: A Survey

The celebration in 1993 of a century of women's suffrage in New Zealand has brought even more sharply into focus the uneven impact of the Employment Contracts Act on the workforce. From the outset, debate about the effects of the Employrnent Contracts Act had focused for some on the likely impacts on women workers. This study is located firmly within the tradition of national and international literature front a range of disciplines including economics, industrial relations, sociology:- law and history, which describes a segmented labour market and labour process. One aspect of labour segmentation theory is gender segmentation, that is, the location of women and men in the labour market and their comparative situations. Much theoretical work and empirical research has been done to describe where women are located in the labour market, why they are located there, and that effects that location has upon them. Even within this field of study there is a wide range of subjects for analysis. For example, the subjects can range from the gender earning gap (Blau and Kahn, 1992) and occupational structures (Terrell. 1992) to the challenge of "flexibility" and the pool of labour women traditionally provide (Walby, 1989). Even the concept of skill itself has bad to be revisited by the gender segmentation theorists (Bervoets and Frielink, 1988). Much of the theoretical framework within which these scholars cited have written, along with numerous others, was codified in the 1970s and 1980s in response to Harry BravetJnan's classic mould-breaking \Vork Labor and Monopol)' Capital published in 1974. Writers such as Phillips and Taylor (1980), Cockbwn (1981, 1983, 1985) and Beechey (1982) remain some of the leading contributors to the discussion and ongoing analysis about women in the vvorkforce. As industrial relations regimes and bargaining structures have altered in the 1980s and on into the 1990s, the changes have been observed to impact differently upon different segments of the labour market

Workplace Europe: new forms of bargaining and participation

There are conflicting tendencies among recent developments in bargaining and participation at the workplace level in Europe. While there is an emphasis on decentralisation of bargaining structures in many countries, there is considerable variance. Similarly, there is a diversity of approaches to both direct and indirect forms of participation. Despite attempts by the European Community to integrate policies on these matters among member countries, external influences such as the globalisation of economies and technologies are leading to diverse outcomes.