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Collective Agreement in Labour Law

Empirically, the relative underperformance of fully decentralised systems is measured by differences in three countries (Ireland, New Zealand and the United Kingdom), all of which have implemented very important collective bargaining reforms. The finding does not appear to be specific to these three countries, as it remains unchanged when country-specific effects are omitted from the regression. Overall, the results are qualitatively robust for two other sensitivity tests – see Appendix 3.B for more details. First, they are similar when more traditional collective bargaining indicators for centralization and coordination (taken from the ICTWSS database) are used instead of the new taxonomy indicators.16 Second, the results on collective bargaining systems are virtually unchanged when collective bargaining is not controlled. Empirically, two categories of factors may be responsible for the lower dispersion of wages in collective bargaining: differences in the performance of characteristics (technically, coefficients) and inexplicable differences (residues). This issue is discussed here by focusing on the two largest groups of countries for which data are available: the first with seven countries (which have three types of collective bargaining) and the second with nine countries (which have two types: collective bargaining at company level and the absence of a collective agreement). UNITED KINGDOM: A series of reforms carried out by the Thatcher government in the 1980s reduced the role of trade unions and decentralised collective bargaining first to an intermediate level (1987-1993) and then to the company level. Figure 3.10 shows the real evolution of negotiated wages, real wages and labour productivity for the euro area as a whole from 2000 to 2016 using ECB data. Aggregate data show that, on average, negotiated wage growth was relatively limited, or at least well below productivity growth before and after the crisis. Real wage growth outpaced negotiated wage growth, but remained below productivity growth, reducing the share of labor. It was only in 2008-2009 that wage growth was negotiated (and real) due to the unexpected deflationary shock of the crisis and the spreading of collective agreements on productivity growth. Shocking refers to the inability to renegotiate agreements signed under more favorable economic conditions, which can increase the overall shock, as shown by Diez-Catalan and Villanueva (2015[43]) for Spain. Organised decentralisation can take different forms – see Ibsen and Keune (2018[70]) for more details.

In a first model, sectoral agreements provide a general framework, but leave room for lower-level agreements to adjust employment conditions. This approach is therefore based on multi-level collective bargaining and strong local representation (or enlargement) and can be found, for example, in Denmark, Norway and Sweden. In these countries, the principle of favour is not enshrined in law, but is left entirely to the parties to collective bargaining, who decide whether and in what case it applies. In this first form of organised decentralisation, inter-trade agreements may take the following forms or a mixture thereof: the effect of collective bargaining also depends on the structure of the market and the degree of competition. With perfect competition in the product and labor markets, rising wages via the market equilibrium wage leads to unemployment. However, if competition in the product market is imperfect (i.e. if firms have some degree of monopoly or oligopolistic power), higher wages cannot lead to higher unemployment, but simply be the result of workers appropriating a larger share of wages. Moreover, in imperfectly competitive labour markets, higher bargaining power and a higher wage floor can increase employment. This would be the case in the presence of a monopson power that allows companies to offer wages below the market wage. B for example because workers have limited opportunities to change employers, or if they do.3 In Finland, collective agreements are universally valid. This means that a collective agreement in an economic sector becomes a universal legal minimum for the employment contract of each individual, whether unionized or not.

For this condition to apply, half of the workers in this sector must be unionized and therefore support the agreement. The chapter uses a variety of approaches, including quantitative analysis and country case studies, and mobilizes both micro and macro data sources. The following section provides the framework by outlining a framework that illustrates how collective bargaining can be important for labour market performance and inclusive growth. Section 3.2 conducts a macroeconomic analysis of the role of collective bargaining in employment and inequality using a new characterization of collective bargaining systems. This makes it possible to go beyond previous macro-studies, which generally focused on the degree of collective bargaining and the level of collective bargaining, also taking into account the flexibility of enterprises to adapt the terms of inter-branch agreements to their needs, and the coordination of wages between collective bargaining units. .

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