The Role of Collective Bargaining in the Global Economy

The Role of Collective Bargaining in the Global Economy

Negotiating for Social Justice

Edited by Susan Hayter

This book examines the ways in which collective bargaining addresses a variety of workplace concerns in the context of today’s global economy. Globalization can contribute to growth and development, but as the recent financial crisis demonstrated, it also puts employment, earnings and labour standards at risk. This book examines the role that collective bargaining plays in ensuring that workers are able to obtain a fair share of the benefits arising from participation in the global economy and in providing a measure of security against the risk to employment and wages. It focuses on a commonly neglected side of the story and demonstrates the positive contribution that collective bargaining can make to both economic and social goals. The various contributions examine how this fundamental principle and right at work is realized in different countries and how its practice can be reinforced across borders. They highlight the numerous resulting challenges and the critically important role that governments play in rebalancing bargaining power in a global economy. The chapters are written in an accessible style and deal with practical subjects, including employment security, workplace change and productivity, and working time.

Chapter 7: Illustrating the Gap: Collective Bargaining and Income Distribution in Chile

Gerhard Reinecke and María Elena Valenzuela

Subjects: economics and finance, labour economics, social policy and sociology, economics of social policy


Gerhard Reinecke and María Elena Valenzuela1 7.1 INTRODUCTION Distributional topics have an important place in public policy debates and are of special relevance in countries with a particularly skewed income distribution such as Chile. Following the global overview on the evidence of worsening wage distribution in a number of countries and the link with weak collective bargaining institutions (Hayter and Weinberg, in this volume), the present chapter will illustrate the same problem through a country case study on Chile. Within the international statistical evidence, Chile is one of the countries with available data with the largest increases in wage inequality between 1995/97 and 2004/05, although the level of wage inequality is in line with several other Latin American countries (ILO 2008b). Whereas in some other countries with particularly important increases in wage inequality, these can be explained by severe economic crises (such as the cases of Argentina, the Republic of Korea and Thailand) or by on-going restructuring in former transition countries (such as Bulgaria, Hungary and Poland), the case of Chile deserves particular attention as these changes have taken place in a comparably favourable economic context. In the case of Chile, the deterioration of the wage distribution is due to a rise in the inequality between median earners and low earners (the fifth decile of wage distribution compared to the first decile), whereas the relation between high earners and medium earners (the 9th decile compared to the 5th decile) has experienced little change (ILO 2008b). The weak performance of...

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