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 10: New Roles for Unions and Collective Bargaining Post the Implosion of Wall Street Capitalism

Richard Freeman

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


Richard Freeman 10.1 INTRODUCTION I regard the growth of collective bargaining as essential. I approve minimum wage and hours regulation. (John Maynard Keynes, 1938, “Letter of February 1 to Franklin Delano Roosevelt, on policies to recover from the Great Depression) Ages ago – or was it just months before Wall Street imploded? – Keynes’ 1938 statement on the role of labour institutions and regulations in economic life seemed a historic relic from the museum of discarded economic thinking. Collective bargaining – essential? Minimum wages and hours regulation – something to laud? Policies to recover from a Great Depression – doesn’t everyone know that laissez-faire is ideal? Before Wall Street imploded, macro-economists believed that monetary policy with some automatic stabilizers tossed in had produced an era of great moderation in economic fluctuations.1 Adherents to real business cycle theory argued that cyclic ups and downs reflected changes in technology and tastes in the real economy, not the vagaries of markets. Financial economists asserted that the efficient market hypothesis fit global finance, give or take a few minor anomalies not worth troubling over. Wall Street’s “best and brightest” had developed mathematically sophisticated financial instruments that spread risks efficiently around the world. The World Bank and IMF touted the US model of capitalism as the poster economy of the modern world. The crown jewels of the model were the weakly regulated capital market and a highly flexible labour market with a minimal role for labour institutions. The OECD (1994) Jobs Study blamed the high unemployment in the EU on...

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