A History of the Invention of Collective Bargaining

Collective Bargaining: A Great Social Invention? =”There’s strength in numbers” This is a cliché, or could even be called a proverb that most of us have heard at some stage in our lives. It also lies at the heart of collective bargaining, and it provides a reasonable, although simplistic reason for the use of collective bargaining, and also gives us an indication of where and for whom it is most useful.Collective bargaining’s origins lie in one of man’s primary instincts; defence.

In an industrial relations context this is defence of proper working conditions, secure employment and proper pay. Collective bargaining allowed this by gaining pay increases through the increased power of the workers as a joint force. In this context I see collective bargaining as more of an economic and political invention which has had an influence on the social aspects of employment and living. Because of this I would have to say that collective bargaining is not a great social invention simply because it was not a social invention.

But it does have social benefits, by providing more economic stability for those who partake in it among other things which I will discuss in this essay.

Collective bargaining also has its disadvantages which I will also discuss. These advantages and disadvantages fall on both sides of the collective bargaining fence; the employees and employers.But what exactly is collective bargaining? The answer to that depends on ones viewpoint. What are the social benefits of collective bargaining? And who do these benefits affect? These are but a few of the questions I intend to answer in the course of the next 2000 or so words.

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To put this essay in context I must say what | feel collective bargaining is and what its purposes are.I see collective bargaining, in its most basic form, as the process by which an organised group of employees, in the form of trade unions, negotiate with employers, their representatives or their associations in relation to any aspect of employment within the employers organisation. The reason that collective bargaining and trade unions are used is the reason cited in the first paragraph; “There’s strength in numbers”. The individual threat by a single employee to withhold labour is not very great. But when the majority of a workforce in an organisation threaten to strike, or threaten any other form of industrial action this threat becomes altogether more substantial. Collective bargaining gives redress to the imbalance of power between individual workers and employers (Gunnigle et al, 1995). This is the main purpose that collective bargaining is used in industrial relations, and essentially gives collective bargaining a political purpose; the equalisation of power. Once this extra power is attained, collective bargaining is then used for primarily economic purposes.

It is only in recent times that social issues have been included in the negotiations in collective bargaining. As this process tends to lead to equal pay for all workers doing the same work, there is as a consequence a social benefit; equality amongst the workforce. While this can have its downside, namely complacency among the employees as there is little incentive to do better in work, this disadvantage has been partly eroded in recent times with the advent of productivity deals, which I will discuss in more detail later in this essay.Collective bargaining is also a political institution in that it regulates and defines the interaction between trade unions and management. In a social context, the consequences of this is a system for regulating industrial conflict. This can help ensure that any industrial conflict is kept within reasonable bounds, and that in most cases the more militant elements in trade unions are kept under control by virtue of the fact that the majority of the workforce see an alternative avenue of dealing with disputes. I believe that this consequence of collective bargaining contradicts the optimistic Marxist view that trade unions and collective bargaining are a school for socialism and a potential revolutionary force. It does confirm the pessimistic view that it ensures that trade unions will never be any more than trade unions, and that collective bargaining oils the wheels of capitalism.

But that’s not a bad thing at all, and is one of the great social benefits of collective bargaining. So how exactly does collective bargaining oil the wheels of capitalism? Collective bargaining provides management with a method for dealing with employees in an equitable way. But not only equitable, but also seen to be equitable. If areas of common interest are maximised, and stressed in the collective bargaining process, this can reinforce a an acceptance of common interest by the workforce (Purcell, 1979). The process of collective bargaining also legitimises trade unions within the company or employing organisation. Purcell also contends that this legitimacy can give trade union members a sense of belonging to the organisation (1979). These three things; the sense of equality, common interest and belonging will make workers more content, minimise conflict and create a feeling of stability within the company. Collective bargaining, when agreements that come from it are for set time periods, can allow management to plan for the future based on those agreements and the knowledge that the unions are likely to cooperate. All of the above oil the wheels of a capitalist society. And as I both live in and believe in a largely capitalist society, this has to be a good social influence. Collective bargaining also has its disadvantages as far as capitalism is concerned. In cases where radicals have managed to hijack the union’s side of collective bargaining then unreasonable demands can lead to severe conflict. The same can be said of the employer side. Inflexible and uncompromising employers can cause severe disharmony, and possibly cause irreversible damage to the employee-employer relationship. But this will only occur in

a minority of situations. The greatest disadvantages of collective bargaining in a capitalist society lie mainly in the financial arena. Collective bargaining in the form of wage rounds leads to both wage and grade drift. Wage drift leads to higher wage costs for employers and higher inflation within the economy, which in turn leads to higher interest rates and lower investment. Lower investment means that fewer jobs are created, unemployment rises, social welfare payments increase and possibly an increase in the national debt. Following these consequences there would be less money in the economy overall in real terms. Grade drift is a problem for employers which is linked to wage drift. Grade drift occurs where secure jobs are one of the trade unions aims in collective bargaining. As jobs become more automated with the advance of technology, employers are forced to keep staff to keep to previous agreements. As companies no longer need as many staff the workforce tends to get older, with rising wage costs and mainly static skill levels.In Ireland over the last 25 years, the focus of collective bargaining has been widened to a nation-wide one from localised and industry level, with various degrees of success. This focus on the nation-wide picture has led to 7 national wage agreements, 2 national understandings, and three other agreements or programmes; the Programme for National Recovery (PNR), The Programme for Economic and Social Progress and the Programme for Competitiveness and Work. It is my opinion that centralised collective bargaining has evolved in much the same manner as collective bargaining itself; focusing on purely economic issues, and then steadily including more social issues. While the national wage agreement secured certain pay increases, the real value of those wages dropped. It was during the era of the National Wage Agreements that inflation rose to 20%, days lost through strikes increased and unofficial strikes increased (

Gunnigle et al, 1995). Although this may seem that this type of collective bargaining had a bad social influence, it must be noted that the OPEC recessions of the 1970’s would have had been a contributing factor to all of the above.In 1987 the government, trade unions and the FUE negotiated the PNR. Other than the provisions for pay increases, social issues were taken into consideration: ‘The programme was to cover the period up to the end of 1990 and entailed the following provisions: – The creation of a fiscal, exchange and monetary climate conducive to economic growth. This included a commitment that the ration of debt to GNP should be reduced to between 5 and 7 percent; -movement towards greater equity and fairness in the tax system -measures to generate employment opportunities -Reduction of social inequalities” (Gunnigle et al, 1995; 191..192) Overall the PNR proved to be a successful venture, although it was helped along by the boom period of the late 80’s. There was substantial economic growth, a reduction in the debt to GNP ratio and a decline in strike levels (Gunnigle et al, 1995). The PESP contained similar, but widened social commitments to the PNR. While not as entirely successful as the PNR, the PESP had its positive social influences in the form of low interest rates and low inflation, in spite of the recession of the early 1990’s. Industrial peace also continued throughout this period. The PCW, like the two programmes before it, focused on social issues in increasing strength. As this programme is still running, we can say little about its success or otherwise, other than to say that there is still relative industrial peace, sustained economic growth and low inflation and interest rates.In the above discussions on the three programmes, I have only considered the more obvious social benefits, i.e.. those which the programmes set out to achieve. There are other social benefits which follow on from those discussed above.

One of the most important of these is confidence in the Irish economy. With industrial harmony, low interest rates, low inflation and sustained growth comes confidence in the economy. One indicator of the fact that the programmes inspire confidence is this: In 1987, when the PNR was being negotiated, the Federated Union of Employers had to be coerced into the negotiations. Yet in 1993, 95% of senior personnel managers were in favour of a further PESP style agreement. (Gunnigle et al, 1995). The stability of the agreements has provided management with a situation where they can be reasonably sure of what is coming and can plan ahead based on that. The programmes have also allowed successive governments to plan ahead, something normally unheard of. Previously, governments had tended to plan for one fiscal year in the form of the budget, but now we have a situation where they are planning for three years with the programmes. The programmes have also provided a sense of continuity, as successive governments from all political parties have continued the programmes. This form of planning ahead has allowed significant progress in the areas of debt reduction, social welfare and taxation. It is not only in an Irish context that collective bargaining has been seen as desiring an effect on social aspects of the economy. In the UK, where there has been little, if any centralised collective bargaining, Fox states: “[Collective bargaining] has often been seen as, though not by all pluralists, not only as levelling up employee power to an acceptable approximation of that of management, but also as reinforcing government social welfare and redistributive policies in gradually reducing class difference.” (Fox, 1985:22) But it would seem that the lack of any centralised bargaining has reduced this impact of collective bargaining; “Collective bargaining has not substantially shifted the proportion of the national product going to wages and lower salaries, nor have welfare and other so-called redistributive policies had the equalising effects imputed on them” (Fox, 1985;22) In Ireland, while there have been few dramatic changes with regard to social welfare, there have been significant cuts in the effective tax rate in favour of the lower paid. If we take the 1994 budget as one example, the effective tax rate for a single person earning £120 per week was cut by 3% from 20.6% to 17.6%.

For the higher paid, if we take the example of someone earning £600 per week, the effective tax rate was only cut by 1.5% (McCarthy and Tansey, 1994). While this cannot be directly attributed to the success or otherwise of Collective bargaining, I maintain that the stabilising effect of the three agreements, along with the commitment therein would have had a distinct influence. This reduction in taxation will have a social influence: “to re integrate larger numbers of the unemployed back into the labour market, it is clearly desirable that the taxation burden on earned income be reduced” (McCarthy and Tansey, 1994;67) Centralised collective bargaining didn’t actually do away with localised collective bargaining. Instead it changed the focus of collective bargaining. Gunnigle and Flood contend that the focus changed from pay increases towards employment conditions, pay anomalies and productivity. (1995). This is another of the good social influences of collective bargaining in Ireland. Now, rather than haggling over minimal wage increases, localised collective bargaining is instead working at improving working conditions, reducing grievances and increasing productivity. This change in focus has led collective bargaining away from the adversarial win-lose situation to a more cooperative model, with management and unions working together to achieve common goals.. While management have had to pay out more to improve working conditions and fund productivity deals, they have gained increases in productivity, worker flexibility and industrial harmony. In the negotiation of these ‘win-win’ deals, one added bonus is the extension of trust. Where both parties to the negotiation stand to gain, communications between them tend to be more open than would occur in an adversarial situation. If agreements are made under good faith, both parties to the negotiation may feel a moral obligation to follow the agreement.

This can cause dual loyalties in staff, that is loyalty to both the Union and the company. This can become a problem should the good relationship between management and unions break down. (Fox 1985). must say that although I believe that collective bargaining’s origins lie mainly in an economic arena, had it been a social invention it would have been a good one. In an Irish context, where the prevailing ideology and public opinion has allowed collective bargaining to flourish, its social impact, while not as great as some would have hoped, has been for the better. When collective bargaining addresses a range of issues which are inter-related, and addresses the interactions between them, the benefits can be great. But when collective bargaining focuses on one issue, without regard for its effects on other issues that the effects can be disastrous, as seen in the case of the national wage agreements.. Collective bargaining is not however, and never will be, a revolutionary force. As Fox wrote in 1985: “Collective bargaining… emerges as a process through which employee collectives aspire, not to transform their work situation, but to bend it somewhat in their favour” (Fox, 1985;153) In conclusion then, while I believe that collective bargaining has many good social influences, it cannot hope to change society in any dramatic way.