Effect of Collective Agreement


26 ←. In systems where collective bargaining takes place mainly at company level, representation in the workplace and the scope of collective agreements go hand in hand. At the same time, Chapter 2 shows that, in these countries, the proportion of employees covered by any form of employee representation in the workplace is lower (whereas it tends to be high in multi-level systems characterised by complementarity between sectoral and company agreements). Therefore, the shift to collective bargaining at the company level could lead to a reduction in coverage. In addition, national construction unions, through their AFL-CIO commercial department, exclude national agreements with contractors for construction and maintenance projects. For example, there are currently national construction agreements covering 301 maintenance projects in 34 states involving 118 employers.31 It is important to note that both the employer and the union are required to abide by this agreement after entering into a collective agreement. Therefore, an employer should seek the assistance of a lawyer before participating in the collective bargaining process. When comparing collective bargaining systems across countries, coordinated systems – including those characterized by organised decentralisation – are associated with higher employment rates and lower unemployment (including for youth, women and low-skilled workers) than fully decentralised systems. Mostly centralized systems without coordination are somewhat in between. Collective bargaining has also had an impact on how wage improvements are implemented. It took into account, in particular as regards the parts of the terms and conditions of employment, that their nature requires collective regulation. This includes, first and foremost, working hours. The expansion of benefits such as employer-sponsored insurance and pensions has also reflected pressure from unions.

The number of members of employers` organizations is significantly higher (50% on average) and has remained relatively stable in recent decades, in contrast to the sharp decline in the number of union members. An extreme case is Austria, where membership of the Austrian Federal Economic Chamber (WKÖ) is mandatory for all companies in each region (federal state). Sectoral agreements signed at regional or, in some cases, national level therefore necessarily cover all companies in the sector, thus eliminating the need for formal renewal measures by the government. Brandl and Lehr (2016[60]) examine trends in 13 European countries and say that employers` organisations have been able to remain relatively strong by adapting their organisational structures and activities to changing business needs. In addition, the application of administrative renewals of collective agreements in many countries strengthens incentives for membership in employers` organizations, since the terms of the agreements also apply to non-members (whose objectives may differ from those of members). Note: Results are based on Juhn-Murphy-Pierce decompositions that use employees without a collective agreement as a reference group and take into account gender, age groups, education, industry, occupation, firm size, type of contract and duration of employment. The Länder are ranked in ascending order of the D9/D1 ratio for employees who are not covered by a collective agreement, with D1 and D9 representing the 1st and 9th deciles of the wage distribution. Depending on the country, the data date from the years 2012-16 (2006 for Germany). The first group of countries compares the dispersion of wages among workers not covered by collective bargaining with the dispersion of wages among workers covered by company agreements and the distribution of wages among workers covered by sectoral agreements.

The second group compares the dispersion of wages among uncovered workers with that of employees with a company agreement. The third group compares the dispersion of wages among non-covered workers with that of employees with an industry-specific agreement. The latter group makes it possible to compare the wage dispersion between employees with a company agreement with that between employees with a sectoral agreement. “Sectoral collective bargaining” for Australia refers to the use of modern prices (see Box 3.5). There is no adequate negotiation at sectoral level in Australia. Unlike the NLRA`s bias for individual collective bargaining units in the workplace, the Railway Labour Act, which regulates union representation in the railway and aviation industries, states that bargaining units are national units at the employer level. Workers seeking union representation under the Railway Labour Act are seeking national unity for all employees of the employer in their respective category or vehicle, such as aircraft mechanics, flight attendants, baggage handlers or customer service representatives. This allows any union in the rail and aviation industries – once it has obtained the right to collective bargaining for the group through an election – to conduct national negotiations with a single national employer. The level of negotiation at which collective agreements are negotiated: company level, sectoral level or even national level. Multi-level collective bargaining involves a combination of collective bargaining at the enterprise level and higher-level collective bargaining. 5. It can widen the gap between employers and employees.

Although collective bargaining aims to find solutions that are beneficial to both management and workers, there are cases where nothing is agreed. If the talks become desperate, the situation could worsen rather than alleviate it. For the opposing group, this can sometimes create a barrier between employers and employees instead of a healthier relationship. Country-specific data (Annex 3.C) show that in all countries (with the exception of Italy, which is due to sluggish productivity growth rather than “excessive” wage increases), negotiated wages rose in parallel or often below labour productivity growth, with the exception of 2008-09. Interestingly, collective wages in the Netherlands have barely moved since 2000 – in fact, collective wages in the Netherlands have remained virtually unchanged in real terms since the 1970s (de Beer and Keune, 2017[44]) – but thanks to considerable wage drift, real wages have risen in line with productivity. In contrast, real wages in Germany have risen significantly less than productivity and less than collective wages, showing a negative “wage drift”. .