Labour Markets, Institutions and Inequality

Labour Markets, Institutions and Inequality

Building Just Societies in the 21st Century

Edited by Janine Berg

Labour market institutions, including collective bargaining, the regulation of employment contracts and social protection policies, are instrumental for improving the well-being of workers, their families and society. In many countries, these institutions have been eroded, whilst in other countries they do not exist at all.

Chapter 4: Unions and collective bargaining

Susan Hayter

Subjects: development studies, development economics, economics and finance, development economics, labour economics, social policy and sociology, labour policy


Trade unions have an important role to play in stemming the rising tide of inequality. As actors in political processes they can influence the direction of economic and social policy and shape the pattern of growth and the distribution of income. When it comes to income from work, unions can use collective bargaining to balance the unequal relationship between an employer and employee and negotiate a fair share of the gains. The results achieved through collective bargaining are more equitable than those arrived at through individual bargaining or unilateral contracting. There is also a greater likelihood that a jointly agreed ‘common rule’ will be complied with. Underpinning this system of social regulation are two fundamental workers’ rights: freedom of association and the right to collective bargaining. The International Labour Organization’s fundamental conventions that are the subject of these rights have been widely ratified by governments. Of the 185 member States, 152 have ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) and 163 have ratified the Right to Organise and Collective Bargaining Convention, 1949 (No. 98). In 1998, the ILO adopted a Declaration on Fundamental Principles and Rights at Work that commits all member states to respect and promote principles and rights in four categories, whether or not they have ratified the relevant conventions.

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