Sector Bargaining Research Articles

Introducing sectoral bargaining in the United Kingdom: Why it makes sense and how it might be done

AbstractThis study argues that sectoral bargaining offers a flexible alternative to legal regulation in setting terms and conditions of employment, encourages participation and involvement, brings benefits to employers and improves productivity and performance. It also provides a platform for sector and cross‐sector social dialogue leading to improved policymaking and better macroeconomic outcomes. A statutory framework based on Wages Council‐type arrangements and advisory, conciliation and arbitration service Codes of Practice is recommended for the United Kingdom, with sectors in the ‘foundational economy’ being prioritised. Sector agreements need to be about much more than pay, though, if they are to realise their potential.

Dancing at the crossroads: Lessons from Ireland on collective labour law reform

AbstractThe past 20 years were convulsive for industrial relations in Ireland: from boom to bust and back again, with the Financial Crisis killing off national bargaining; the Supreme Court first undermining sectoral bargaining, then shifting back in favour of it; and of course, the Covid‐19 pandemic generating an overhaul of working conditions across society. All along, widespread industrial unrest has been notable by its absence. Long‐term decline in Irish trade union density continues, despite recent research showing significant popular support for trade unions, particularly among young workers. Now, the obligation to transpose the Directive on Adequate Minimum Wages has brought Ireland to a crossroads in collective labour law and industrial relations reform. How Ireland has responded to these pressures, internal and external, holds lessons for other jurisdictions, of which this article highlights three: a commitment to pragmatic adaptation over principled coherence makes measuring the success of any reform project difficult; different methods of reform enjoy varying levels of legitimacy; and disjunction between different levels of bargaining generates pressure on the system, including risks to the legitimacy of the system itself and the actors within it—particularly beleaguered trade unions.

One-way street to the European Union? Between national and EU-level social dialogue 20 years after eastward EU enlargement

This article assesses perceptions among national and EU-level social partners of developments in social dialogue since the EU accession of Central and Eastern European (CEE) countries 20 years ago. The analysis evaluates the processes, structures and outcomes of interactions between social partners from CEE countries and the EU level. Social partners from CEE countries see the benefits of interaction with and exposure to EU-level social dialogue. On the other hand, their underdeveloped national structures for tripartite dialogue and sectoral bargaining pose a substantial barrier to capacity building and to voicing their interests at the EU level, undermining their legitimacy in EU-level structures. Even 20 years after enlargement, there is a perceived duality and internal competition between ‘Western’ and ‘Eastern’ social partners at the EU level, criticisms of the ability of EU-level social dialogue structures to deliver effective outcomes, and a diversity of actors’ preferences concerning binding and non-binding provisions.

Employer associations in light of the Great Recession and radical labour market deregulation in Southern Europe: An analysis from the perspective of company membership

AbstractThis article analyses the impact of the Great Recession and radical labour market deregulation on employer associations’ (EAs) membership levels and composition in Southern Europe. It also reviews the literature and advances it in four relevant aspects. First, it verifies a general decrease in membership of EAs in Southern Europe, almost to the point of collapse in Greece. Secondly, it identifies the greater importance of large companies (more than Fordist economic sectors) in the composition of this membership. Thirdly, it confirms that sectoral bargaining (as a major determinant) and union representation (an element weakened by reforms) are strong company-level incentives for membership in EAs. Finally, it re-examines the reasons put forward in the scholarly literature to explain why EAs in Southern Europe have not been in favour of these significant institutional changes.

Public sector wage bargaining and the balanced growth model: Denmark and Sweden compared

Denmark and Sweden are small open economies that rely on exports for economic growth. At the same time, these countries have some of the largest public sectors in the world and a high wage equality. With extensive collective bargaining and strong unions in both private and public sectors, coordination of wage setting is crucial for balancing competitiveness and real wage increases. This paper investigates how coordination between public sector and private sector wage setting in the two countries is achieved. Like other studies, we find that agreements in the manufacturing export sector set the pattern for public sector wage bargaining. However, we also find that institutional differences have significant distributive implications for public sector employees. In Denmark, wage increase disparities between the public and private sectors are automatically adjusted according to formalized procedures. In Sweden, no automatic adjustment exists, and coordination is instead based on tightly coordinated bargaining practices by unions and public sector employers. Surprisingly, we find most public sub-sector variation of wage increases in Denmark, whereas wage structures in Sweden have been very stable. We argue that timing of bargaining, level of private sector wage flexibility and politicization of public sector bargaining are key drivers for these distributional differences.

How should we think about employers’ associations?

AbstractWe maintain that employer associations are a specific form of employer collusion that is overt, formal and labour market‐focused which encompasses but is by no means confined to collective bargaining. We consider the conditions under which this form of collusion might emerge, and how it might develop. Since the context is the decline of employers’ associations in collective bargaining, we look at how collective bargaining involvement (and its disappearance) might relate to the growth or decline of other forms of collusion in areas such as product and financial markets, and political influence. Our central contention is that employers’ associations continue to perform an important role in helping employers set the terms of trade, albeit one that has adapted to the demise of sectoral bargaining.

BENJAMIN SACHS INTERVIEWED BY MARTHA MINOW

BENJAMIN SACHS INTERVIEWED BY MARTHA MINOW

Divided Unions: The Wagner Act, Federalism, and Organized Labor

Divided Unions: The Wagner Act, Federalism, and Organized Labor

Wage Flexibility under Sectoral Bargaining

Abstract Sectoral contracts in many European countries set wage floors for different occupation groups. In addition, employers often pay a wage premium (or wage cushion) to individual workers. We use administrative data from Portugal, linked to collective bargaining agreements, to study the interactions between wage floors and wage cushions and quantify the impact of sectoral wage floors. Although wages exhibit a “spike” at the wage floor, a typical worker receives a 20% premium over the floor, with larger cushions for older- and better-educated workers and at higher-productivity firms. Cushions also allow wages to covary with firm-specific productivity, even within sectoral agreements. Contract negotiations tend to raise all wage floors proportionally, with increases that reflect average productivity growth among covered firms. As floors rise, however, cushions are compressed, leading to an average passthrough rate of about 50%. Finally, we use a series of counterfactual simulations to show that real wage reductions during the recent financial crisis arose through reductions in real wage floors, reductions in real cushions, and a re-allocation of workers to lower wage floors. Offsetting these effects was a rapid rise in education of new cohorts, which in the absence of other factors would have led to rising real wages.

Sectoral Bargaining Reforms: Proceed with Caution

Sectoral Bargaining Reforms: Proceed with Caution

Sectoral Bargaining Reforms: Proceed with Caution

Sectoral Bargaining Reforms: Proceed with Caution

BREACH OF A COLLECTIVE AGREEMENT: DOES THE LRA PROVIDE A REMEDY IN SECTION 24? Minister of Safety and Security v Safety and Security Sectoral Bargaining Council [2010] 6 BLLR 594 LAC

In a recent judgment of the Labour Appeal Court the application of section 24 of the Labour Relations Act (66 of 1995, hereinafter “the LRA”) was considered, and curtailed. In this case note the judgment of Minister of Safety and Security v Safety and Security Sectoral Bargaining Council ([2010] 6 BLLR 594 LAC, hereinafter “Minister of Safety and Security”) is evaluated. In addition, an amendment to section 24 is proposed with a view to clarifying the ambit of the dispute-resolution procedure contained in that section of the LRA.

A shock to the system: sectoral bargaining under threat in Ireland

In Náisiúnta Leictreach Contraitheoir Éireann v Labour Court, the Irish High Court struck down as unconstitutional a key component of Ireland’s industrial relations system for the third time in recent years. The Court determined that the extension of collective agreements erga omnes breaches the constitutional prohibition on the delegation of legislative power. This note explains the background to that decision and critiques the Court’s reasoning from the perspective of a ‘labour constitution’ model of labour law, and in light of international and European legal principles. The decision appears to misunderstand the place of collective bargaining at a sectoral level within European internal market and competition law. It also seems to rule out any form of meaningful participation by workers, employers and their representatives in collective bargaining on a sectoral basis or through dedicated industrial relations machinery. According to the vision of Irish constitutional law put forward in this case, decisions relating to the administration of production and economic life more broadly must be reserved to the legislature. This is a significant loss for the autonomy of the social partners and represents an impoverished understanding of democracy and legitimacy within the constitutional order, and risks leaving Ireland even more of an outlier in Europe than it already is on the issue of sectoral collective bargaining.

New Zealand’s fair pay agreements: a new direction in sectoral and occupational bargaining

ABSTRACT New Zealand is developing a new system of industry and occupational collective bargaining, called Fair Pay Agreements, aiming to establish negotiated terms, conditions and standards across specified industries, sectors or occupations. This article describes the proposal, its genesis and content, including how it will interact with other bargaining and wage-setting machinery in New Zealand. The article considers several important issues that remain to be determined including whether the system will be compulsory or voluntary; the determination of participating bargaining parties and their representation; whether FPA provisions will be extended to contractors or limited to employees; the extent of exemptions or flexibility; and the extent and nature of arbitration. The article considers whether FPAs have the potential to transform industrial relations in New Zealand, and contribute to a reinvigoration of collectivism in employment relationships. Finally, the article provides some international comparisons between the FPA proposal and models of sectoral standard-setting in other countries.

Wage Boards And Labor Revitalization: Uruguay As An Exploratory Study

State-supported sectoral bargaining through wage boards is gaining traction among some U.S. reformers interested in revitalizing labor unions and labor law. New York has become a celebrated case, but the recent experience there left some activists disappointed. Theoretically, revitalization through wage boards is complicated. Labor law doctrine, which favors collective autonomy, might endorse state-created wage boards, but only in a qualified manner. Moreover, reformers consider union membership growth to be important for labor union revitalization. And yet, empirical studies have shown that sectoral bargaining has an indeterminate impact on union membership. Given New York’s uneven results, and theoretical qualifications and indeterminacies, this article presents Uruguay as a successful case of wage boards, from where we can draw lessons for other jurisdictions, including the United States. The article describes how Uruguay’s wage councils, convened in various periods since 1943, revitalized labor unions in the South American country, at least in some periods. Specific economic, institutional, and political conditions facilitated the success of the wage councils, pointing at the socio-historical conditions needed for successful wage board strategies. The article concludes with five hypotheses for the U.S., and three issues for further research to better understand when wage boards can best work.

Wage Flexibility Under Sectoral Bargaining

Sectoral contracts in many European countries set wage floors for different occupation groups. In addition, employers often pay a wage premium (or wage cushion) to individual workers. We use administrative data from Portugal, linked to collective bargaining agreements, to study the interactions between wage floors and wage cushions and quantify the impact of sectoral wage floors. Although wages exhibit a “spike” at the wage floor, a typical worker receives a 20% premium over the floor, with larger cushions for older and better-educated workers and at higher-productivity firms. Cushions also allow wages to covary with firm-specific productivity, even within sectoral agreements. Contract negotiations tend to raise all wage floors proportionally, with increases that reflect average productivity growth among covered firms. As floors rise, however, cushions are compressed, leading to an average passthrough rate of only about 50%. We find no evidence of employment responses to floor increases. Finally, we use a series of counterfactual simulations to show that real wage reductions during the recent financial crisis arose through reductions in real wage floors, reductions in real cushions, and a re-allocation of workers to lower wage floors. Offsetting these effects was a rapid rise in education of new cohorts, which in the absence of other factors would have led to rising real wages. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Wage Flexibility Under Sectoral Bargaining

Wage Flexibility Under Sectoral Bargaining

Progress and contradictions: New Zealand's new sectoral bargaining framework

Progress and contradictions: New Zealand's new sectoral bargaining framework

Editorial: a changing post-pandemic world for labour

2 | International Union Rights | 28/2 EDITORIAL Editorial: a changing post-pandemic world for labour The latest edition of IUR focuses on changes taking place in and around the world of work. Our selection reveals labour law reforms but no consistent pattern, with progressive announcements in some countries and sweeping attacks in others. We open with welcome news from the US, where the Biden administration has quickly introduced much needed reforms. Lynn Rhinehart describes the so-called PRO-Act as ‘by far the most significant piece of labour law legislation in decades’ promising to stop employer interference in union elections, restore workers’ bargaining power, improve relief for illegally fired workers, and override ‘right to work’ laws. It seems the US could rapidly see very significant improvements for trade union rights. As David Bacon’s piece on union access to farm workers reveals, however, there remains strong opposition to even basic union rights for even low paid and temporary workers. Over in Ukraine it is a different picture. As in other former Soviet states, the aspects of trade union law that were the bedrock of a very strong framework of social protection are being identified by a modernising administration as archaic barriers to business. Rights and privileges such as union ownership of and provision of fitness and holiday institutions - which gave trade unions considerable powers within the workplace and indeed a strong social role generally – are also all under threat. In New Zealand there is also a sense of radical reform, albeit it a very positive and pro-union agenda, with the government promising a new sectoral bargaining framework. Many looking at the proposals see real possibilities, but if the government is so supportive of workers’ rights why has the country not ratified ILO Convention No. 87, and why are the nurses on strike again? The background to the recent violent repression of a strike at a power station in Banshkhali in Bangladesh is set out for us by Anupoma Joyeeta Joyee. Seven strikers were shot dead at Banshkhali, making it one of the most severe recent cases of strike repression, though one that has been largely overlooked by the global unions. ICTUR is further dismayed to record the killing of another migrant worker activist from one of Italy’s base unions, which appears also to have gone unmentioned by the ITUC. And Labourstart’s Eric Lee raises with us another recent case where he argues similarly that the global unions could and should have responded to the case of an arrested migrant rights activist. We turn then to the other aspect of change discussed in this edition of IUR, which concerns not labour law but the changing nature of work and new trade union strategies and practices. Associate Professor Huang Yu brings a warning from China that workers are so far failing to fight for ‘the robot dividend’, managing at best to sustain conditions. And the other dramatic transformation affecting trade union work over the past 18 months has been the struggle to adapt and continue trade union work under the conditions of the pandemic. Dr. Niall Cullianane and Gareth Murphy discuss how the Irish FSU union has adapted to online tools, celebrating some success, ‘the shift to online unionism enhanced some opportunities for officers and staff to share ideas more frequently’, but noting that ‘socially distanced’ outdoor meetings were still regarded as important, and that ‘exchanges with employers have been less than ideal’. Hazel Nolan discusses relating themes around online outreach and activism in a major dispute with British Gas, revealing unexpected potential for online trade unionism to have a dramatic impact and to generate an impressive level of activism and member involvement. We close this edition of IUR with thoughts from ICTUR President and Vice President Lord John Hendy QC and Professor Keith Ewing, who remind trade unionists of the importance of language with their warning against the pernicious phrase ‘the labour market’, which they argue is giving ‘legitimacy to a capitalist mythology in which buying and selling labour is a natural and unalterable part of the human condition’. Daniel Blackburn, Editor Next issue of IUR Articles between 850 and 1800 words should be sent by email (mail...

Progress and contradictions: New Zealand's new sectoral bargaining framework

8 | International Union Rights | 28/2 FOCUS | A CHANGING POST-PANDEMIC WORLD FOR LABOUR In 2018 I worked with the NZCTU’s legal advisor to co-author a submission to the UN’s Universal Periodic Review of New Zealand, which took place the following year. It was an interesting project to be involved with, because the violations of trade union rights in New Zealand are obviously less severe than many of the situations ICTUR normally responds to, but it was nonetheless an example of a country in which a very strong trade union framework had been dismantled, with sweeping and lasting impacts on the world of work. Does the new sectoral bargaining framework herald an effective tack back to a robust labour rights system? New Zealand remains one of very few countries in the world not to have ratified the most fundamental international instrument on trade union rights, ILO Convention No, 87. Historically, this peculiarity had come about not because of opposition to trade unionism, but conversely because New Zealand believed that its 1930s-era compulsory trade union system was superior to – and would be incompatible with – the post-war liberal trade union rights model of ‘freedom of association’1. The New Zealand Government thus refrained from ratification of the ILO instrument and only ratified the UN’s two core human rights Covenants (the ICCPR and the ICESCR) with formal reservations against the freedom of association principles. But the reservations New Zealand lodged were specifically worded to apply to ‘existing legislative measures’ in 1978, and were intended to protect a compulsory union membership system that ended decades ago. As ICTUR and the New Zealand Trade Union Council wrote in 2018 submissions to the UN Universal Periodic Review, ‘this once principled stance has simply become an embarrassing anachronism’ that ‘sends the wrong message about New Zealand’s commitment to freedom of association and the protection of that right’2. For most of the 20th Century registered trade unions enjoyed monopoly bargaining rights and a system of compulsory unionism, until the dramatic changes wrought by the Employment Contracts Act (ECA) of 1991, which remained in force until 2000. The Act supported individual bargaining and individual contracts rather than collective agreements and curtailed the grounds on which strike action could lawfully be initiated. Membership in NZCTU-affiliated unions halved over the decade. The fall was attributed to the ECA but also widespread privatisation and high unemployment. National bargaining was terminated in several sectors, and by 1993 there had been a 45 percent fall in the number of workers covered by collective agreements. In 1994 the ILO ruled that the ECA breached ILO Conventions 87 and 98, but the Government ignored the ruling. According to the NZCTU the ECA encouraged the growth of ‘poor quality jobs’, with an increase in casual and part-time work and exploitation of vulnerable workers by bad employers. It had also led to a ‘collapse of trust and good will’ in industrial relations. In elections in Nov. 1999 the Labour Party returned to office and introduced the Employment Relations Act (ERA). The ERA retained a focus on individual contracts and a workplace bargaining model, giving registered unions the exclusive right to negotiate collective agreements and introducing a new legislative concept (based on Canadian models) of good faith negotiations in collective bargaining. The NZCTU regarded the Act as only a moderate improvement that ultimately failed in many of its stated objectives. Following the National party’s return to power in 2008 a raft of reforms were introduced, which the NZCTU denounced as an attack on union membership, exercise of union rights, collective bargaining and, therefore, wages and conditions. For all the praise that the country’s current Prime Minster and Labour Party leader Jacinda Ardern earned internationally as a ‘liberal beacon’, and ‘the anti-Trump’3, the problems for New Zealand’s workers and unions have as yet remained structurally unchanged since the 1990s. Just this year NZCTU leader Richard Wagstaff reported that ‘at least 30 percent of New Zealand’s workers – over 635,000 people – are in insecure work. We believe it may well cover 50 percent of the workforce. 95,000 workers have no usual work time, 61...