The Role of Collective Bargaining in the Global Economy
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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.
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Chapter 6: Mind the Gap: Collective Bargaining and Wage Inequality

Susan Hayter and Bradley Weinberg


Susan Hayter and Bradley Weinberg 6.1 INTRODUCTION The global economic crisis that unfolded in late 2008 exposed fundamental shortcomings in the regulation of finance, inadequacies in corporate governance and deepening distributional ‘fault lines’. While the incomes of top earners soared, the wages of those at the bottom of the income distribution stagnated or fell. This was accompanied by a marked decline in the wage share in many developed and developing economies (IMF, 2007; ILO, 2008). Growing pressure from these stagnating incomes contributed to domestic imbalances, such as distorted lending in the financial sector in the USA, which in turn contributed to global imbalances (Rajan, 2010). A United Nations Commission on the reform of the international financial and monetary system which included internationally renowned economists such as Joseph Stiglitz consider the rise in income inequality and stagnating wages to be an important source of the crisis and note: There were many forces contributing to this growth in inequality, including asymmetric globalization, especially that facilitated the greater ease of movement of capital than labour, the weakening of labour unions, deficiencies in corporate governance, and breakdown of social conventions which resulted in greater disparities in compensation between top executives and other workers. (United Nations, 2009, p. 26) This chapter focuses on one particular aspect of the rise in income inequality: the widening gap between high and low wage earners. The gap between high-wage earners (those earning more than 90 percent of earners) and low-wage earners (the bottom 10 percent of earners) has grown...

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