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 9: The Economic Impact of Collective Bargaining Coverage

Franz Traxler and Bernd Brandl

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


Franz Traxler and Bernd Brandl 9.1 INTRODUCTION Collective bargaining is a cornerstone of industrial democracy. It gives employees a collective voice vis-à-vis the employers who always represent collective entities (that is, the companies). The quantitative importance of collective bargaining, as a means of regulating the employment terms, generally increases with its coverage, that is, the number of employees under its purview. Since employees account for the vast majority of the population, the terms of employment are of macroeconomic relevance and relate to broader developments of economy and society. Hence collective bargaining is not only a matter of industrial democracy, but also of socioeconomic governance. This raises the question of whether and how collective bargaining actually affects the employment terms and other socio-economic conditions, as compared to a situation where collective bargaining is absent. This chapter addresses the question by analysing the economic effects of collective bargaining coverage on the basis of a cross-national comparison of 18 countries for the period from 1980 to 2000. The structure of this chapter is as follows: ● ● ● ● Section 9.2 summarizes the main lines of theoretical reasoning on collective bargaining and economic performance. Section 9.3 describes the hypotheses, the modelling strategy and measures for collective bargaining coverage and bargaining centralization. It gives an overview of the dependent variables, which include three major areas: economic efficiency, (un)employment and the distribution of income. Section 9.4 presents the empirical results on the impact of collective bargaining on economic efficiency, employment and wage inequality. The study concludes by...

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