Collective Bargaining

A process by which an employer negotiates with employees toward an agreement that applies to all employees. That is, collective bargaining is not a negotiation involving individual employees but rather all employees at a company, or at least all who choose to be represented by a trade union. In the United States, companies are not allowed to discipline employees for attempting collective bargaining. See also: Bargaining Unit.

collective bargaining

NEGOTIATION between employers or managers and representatives of the workforce to determine rates of pay (see WAGE), conditions of employment, etc. The desired outcome of collective bargaining is a collective agreement between the parties. In the UK these agreements have no legal force (see VOLUNTARISM) and, except where they incorporate statutory requirements, there are no legal sanctions that can be used if one party chooses to break the agreement. It is now customary in the UK for collective bargaining over pay rates to take place annually, though some employers have recently sought collective agreements of a longer duration. Collective bargaining usually takes place in accordance with procedures which are themselves generally established through bargaining (see PROCEDURAL AGREEMENT). Although there are no conclusive figures, it is reliably estimated that currently around a third of the employed labour force in the UK have their pay and conditions determined by collective bargaining.

Contrasts can be drawn between two fundamentally different approaches to collective bargaining. Distributive bargaining is where one side's gain is seen as the other's loss. The money to be distributed as a result of this bargaining process is essentially seen as a ‘cake’ of a fixed size. This sort of bargaining is inevitably adversarial as each side seeks to minimize the concessions it makes to the other. In integrative bargaining by contrast, the parties seek ways of increasing the size of cake. For instance, the money available for wage increases could be enlarged by agreeing changes to working practices. This approach therefore tends to be more cooperative in character.

In the UK, integrative bargaining is more widely known as productivity bargaining. This involves employers offering to improve pay or conditions of employment in return for the relaxation by the workforce and trade union of DEMARCATION LINES, ‘RESTRICTIVE LABOUR PRACTICES’ and other restraints on the efficient utilization of labour (see LABOUR FLEXIBILITY). SOCIAL PARTNERSHIP, whereby employers and unions agree to flexibility in return for job security, is a form of integrative bargaining. Productivity bargaining enjoyed renewed popularity in the 1980s because of the imperative for many firms to secure improvements in productivity. An alternative approach known as concession bargaining also occurred in the 1980s. Whereas productivity bargaining trades extra payments for changes in working practices, this form involves no offer of payment, management arguing instead that unemployment will result if changes are not agreed. It can, therefore, involve a more confrontational approach and can be viewed as a form of distributive bargaining.

To compare patterns of collective bargaining between firms, various dimensions of collective bargaining are used in INDUSTRIAL RELATIONS analysis:

extent of bargaining: the proportion of employees who are covered by collective agreements;
bargaining depth: the extent to which workforce representatives are involved in the administration of agreements achieved through collective bargaining;
bargaining scope: the range of issues which are subject to bargaining;
bargaining level: the level of an industry at which bargaining takes place (see below);
bargaining unit: the occupations which are covered by an agreement. There may be one bargaining unit – covering an entire workforce in a plant or industry – or separate units for different categories of employee.

These dimensions taken together are said to form the bargaining structure.

Industrial relations research in the UK has been especially concerned with the level of bargaining over pay. Three levels are most important:

industry-wide or multi-employer bargaining: where representatives of all or most employers in a particular industry and TRADE UNION negotiate pay rates for employees in that industry See EMPLOYERS' ASSOCIATION, MULTIEMPLOYER AGREEMENT;
company or single employer bargaining: where head office managers in a firm and either SHOP STEWARDS or trade union officials negotiate pay rates for employees at all locations of the company;
plant , decentralized or workplace bargaining: where shop stewards bargain on behalf of employees at a particular plant or workplace with managers at that plant.

Broadly speaking, there has been a trend in UK industry away from industry-wide bargaining to company and plant bargaining.

In practice the structure of bargaining in the UK is highly complex. Collective bargaining on behalf of a given set of employees may occur at more than one level. Some issues may be determined in industry-wide bargaining, others by plant bargaining, whilst particular issues may be subject to negotiations at more than one level. Where collective bargaining breaks down, the parties may refer the issue to a third party for ARBITRATION. If this is not done it is possible that a STRIKE or some other form of INDUSTRIAL ACTION could occur. See SINGLE TABLE BARGAINING.

collective bargaining

the negotiation of PAY, conditions of employment, etc., by representatives of the labour force (usually trade union officials) and management. Collective bargaining agreements are negotiated at a number of different levels, ranging from local union branches and a single factory to general unions and an entire industry Increasingly, plant- and company-level collective bargaining has dealt with PRODUCTIVITY as well as wages and conditions, with trade unions and the workforce offering to relax RESTRICTIVE LABOUR PRACTICES in return for improved wages and conditions. Such relaxations allow the firm to utilize labour more efficiently and flexibly, helping to improve the competitiveness of the firm.

Industry-wide bargaining can have inflationary consequences when trade unions use comparability arguments for wage increases with high percentage wage increases in industries that have experienced large productivity gains being extended on comparability grounds to other industries where the increases are not entirely justified on efficiency grounds. The selective use of comparability arguments for wage increases and pressures to maintain traditional WAGE DIFFERENTIALS can lead to COST-PUSH INFLATION. See TRADE UNION, INDUSTRIAL RELATIONS, INDUSTRIAL DISPUTE.