To examine the links between centralization and coordination and productivity growth, the following variant of rajan and Zingales` (1998[58]) sectoral approach is used. The premise is that collective bargaining reforms tend to affect sectors with high collective bargaining and that, therefore, productivity growth in these sectors should be more severely affected. The estimation equation is as follows: Figure 3.10 shows the real evolution of negotiated wages, real wages and labour productivity for the euro area as a whole from 2000 to 2016 using ECB data. Aggregate data show that negotiated wage growth was relatively limited on average, or at least well below productivity growth, before and after the crisis. Real wage growth outpaced negotiated wage growth, but remained below productivity growth, reducing the share of labor. It was only in 2008-2009 that wage growth was negotiated (and real) due to the unexpected deflationary shock of the crisis and the spreading of collective agreements on productivity growth. Perplexity refers to the inability to renegotiate agreements signed under more favourable economic conditions, which can add to the general shock, as shown by Diez-Catalan and Villanueva (2015[43]) for Spain. The OECD (2012[18]) and OECD (2017[2]) have found that cross-sectoral wage coordination can contribute to labour market resilience after an economic downturn through greater flexibility in earnings (i.e. working hours and wages) and better employment outcomes based on wage moderation. The new findings in Section 3.2 on the relationship between collective bargaining systems and employment further support these findings. [53] Andreasson, H. (2017), “The effect of decentralized wage bargaining on the structure of wages and firm performance,” Ratio Working Paper, No. 241.

In the case of an issue that has been the subject of negotiations between the employer and the employees or that is part of a collective agreement, it should be explicitly mentioned in the information. However, the case-law on freedom of association and collective bargaining states that “the closure of a company must not, on its own, lead to the termination of the obligations arising from the collective agreement, in particular as regards compensation in the event of dismissal”. [1] The results of this section suggest that some collective bargaining systems may be associated with larger wage and productivity mismatches, with potential consequences for productivity growth. However, few newspapers have directly examined the role of various features of tariff systems, such as centralization or coordination, in productivity, in part due to the lack of appropriate data. Andreasson (2017[53]) notes that in Sweden, firms with more decentralised wage-setting have higher value added per employee and higher productivity. Similarly, Garnero, Rycx and Terraz (2019[54]) establish a positive link between decentralised collective bargaining and productivity using Belgian data at company level. For developing countries, Lamarche argues (2013[55]; 2015[56]) that firm-level agreements rather than sectoral agreements could lead to productivity gains. However, Hibbs and Locking (2000[57]) document that decentralization in Sweden in the 1980s reduced overall productivity growth by slowing the exit of inefficient firms. Taking the results of these papers together, decentralization appears to improve firm productivity, while slowing the purifying effect of wage growth and thus does not translate into higher growth in overall productivity due to compositional effects. Currently, the union membership quota is only in OECD countries with the “Ghent system”, i.e.

where trade union institutions administer unemployment benefits (Denmark, Finland, Iceland, Sweden and partly Belgium), and in Norway more than 50%. But the Ghent system has also gradually been eroded by the development of private insurance funds. The use of administrative extensions and erga omnes clauses extending collective agreements to non-unionized workers and unregistered enterprises may have weakened incentives to join a union (as non-union members enjoy the same rights as union members). Several countries use tax incentives to promote union membership. Norway, for example, subsidizes union membership through tax breaks. Barth, Bryson and Dale-Olsen (2017[59]) show that the increase in subsidy generosity from 7% of average dues in 2001 to 21% in 2012 was important to slow the decline in union density. Other examples include Sweden, which has just reintroduced a subsidy for union members that was abolished in 2007, and Finland, where union dues and employers` association dues are tax deductible. [103] Hijzen, A., P. Martins and J.

Parlevliet (2019), “Frontal assault versus incremental change: A comparison of collective bargaining in Portugal and the Netherlands,” IZA Journal of Labor Policy, Vol. 9/1, The board reviews the appeal and decides whether to dismiss the appeal or to order in good faith compliance with the negotiation requirement. Either or both parties may also apply to the Minister for the appointment of a conciliator. The duration of the derogation should be limited in order to ensure that the conditions return to the standards of the sectoral agreement; This is an option open to the parties to a complaint and allows an arbitrator to resolve the complaint within a specified period of time. You can request expedited arbitration after you have exhausted the grievance process under your collective agreement or 30 days have passed since the other party was first informed of the complaint, whichever comes first. Strengthening the bargaining power of low-wage workers is one of the essential tasks of collective bargaining, so it is not surprising that collective bargaining is empirically associated with lower levels of inequality. Detailed salary scales, when defined, can compress wages at the middle and top of the distribution to compensate for higher wages at the bottom; Leonardi, Pellizzari and Tabasso (2015[26]) provide evidence of wage compression in Italian companies.

These mechanisms are particularly relevant when collective bargaining affects a significant part of the labour force. Section 3.3 provides further evidence of the positive role of collective bargaining in equal pay based on consistent data at employer-employee and industry level. The results in this chapter on inequality complement previous findings along the same lines, from previous studies by Blanchflower and Freeman (1993[27]), Blau and Kahn (1999[28]), Card, Lemieux and Riddell (2004[29]) and DiNardo and Lee (2004[30]) to more recent studies such as the OECD (2011[31]), the ILO (2015[32]) and Jaumotte and Buitron (2015[33]). 18. What happens if an employee or union believes that the employer is not complying with the provisions of the collective agreement or if there is disagreement about the meaning of a part of the collective agreement? For collective bargaining to have a significant macroeconomic impact, it must involve and cover a large proportion of workers and businesses. Well-organised social partners – trade unions and employers` associations with a broad base of support – are often the prerequisite for high coverage. .