Keith Sisson
Industrial Relations Research Unit
University of Warwick
Coventry CV4 7AL
Paul Marginson
Industrial Relations Research Unit
University of Warwick
Coventry CV4 7AL
Co-ordinated Bargaining:
A process for our times?
Keith Sisson and Paul Marginson
Working Paper 14/00
ABSTRACT
This paper draws on a wide range of experience, from the past as well as the present,
to offer a systematic overview of co-ordinated bargaining, which many commentators
see as the most likely vehicle for the ‘Europeanisation’ of industrial relations. It
considers the circumstances in which co-ordinated bargaining is practised, emphasising
the key role of the negotiating process in dealing with the collective action problem as
well as the implications of specific economic and institutional structures. In the light of
the analysis, it argues that co-ordinated bargaining is indeed likely to play a major role
within the EU, reflecting not only trade union pressures but also management’s use of
benchmarking to promote organisational change and competitiveness. The pace with
which co-ordinated bargaining develops is likely to vary considerably both within and
between sectors, however, leading to multi-speed ‘Europeanisation’ and further
decentralisation of collective bargaining within national systems.
ACKNOWLEDGEMENTS
This is a revised version of a paper prepared for the ESRC “One Europe or Several?”
Programme Conference, University of Sussex, September 21-22, 2000.
This paper is part of the research project entitled ‘Emerging Boundaries of European
Collective Bargaining at Sector and Enterprise Level’, Grant Number L213252040,
within the “One Europe or Several?” Programme.
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INTRODUCTION
The relationship between the institutions of employment regulation and the wider
economic and political context has been an enduring focus of the academic study of
industrial relations. Of particular interest has been connection between the levels of
employment regulation, on the one hand, and the nature and extent of markets, on the
other. Indeed, in a subject not noted for its ‘laws’, one of the propositions that comes
pretty close, first enunciated by Commons (1909) in a celebrated article on the collective
bargaining activities of American shoemakers over nearly 200 years, is that the
industrial relations system follows the market. Not surprisingly, therefore, the coming of
the Single European Market (SEM) and its associated political developments has led to
considerable reflection about the prospects for the ‘Europeanisation’ of industrial
relations (see, for example, the collections in Kauppinen, 1998 and Pochet, 1999).
The present paper focuses on co-ordinated bargaining, which many commentators see
as the most likely vehicle for such ‘Europeanisation’ (see, for example, Villé, 1996;
Freyssinet, 1996; Traxler, 1996; Sisson et al., 1999a). Co-ordinated bargaining first
appeared as an issue during the debate over the employment and inflation effects of
different levels of national collective bargaining (for further details, see the Working
Paper in the Economic and Social Research Council’s ‘One Europe or Several’ series
by Kilponen et al., 1999). Briefly, Bruno and Sachs (1985) produced evidence to
suggest that centralised structures produced superior effects, whereas Calmfors and
Driffill (1988) suggested that both centralised and decentralised arrangements did. Yet
much depended, as Soskice (1990) pointed out, on the specification of the degree of
centralisation. Both sets of authors, Soskice rightly argued, had failed to take into
account that it is not so much the level at which collective bargaining takes place that is
important, but the extent to which it is co-ordinated. If the bargaining level is the focus,
for example, Japan appears as one of the most decentralised countries; if co-ordination
is taken into account, it moves to the other extreme.
More recently, the issues have taken on a cross-national dimension with the advent of
Economic and Monetary Union (EMU). As Soskice and Iversen (1998:112) note:
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When individual economies, each with relatively co-ordinated/centralized wage
bargaining and independent central banks, are merged together into a single
currency area with one central bank, overall co-ordination will decline and
equilibrium unemployment rise.
Given the European Central Bank’s (ECB) remit, many commentators see EU-level coordination of pay bargaining as essential if such deflation is to be avoided. In the words
of the EU Economic and Social Committee’s working document on ‘Employment policy
and the role for socio-professional organisations in the third phase of economic and
monetary union’ (1998), there appear to be two avenues open to ‘socio-professional
organisations, who are in the front line of wage negotiations’:
•
either decentralising the bargaining process, to give freer rein to market forces …
(which) involves risks regarding inflation control;
•
or attempting to consolidate the co-ordination of collective bargaining and adding an
additional dimension. Wages in neighbouring countries, particularly if they belong to
the EMU, are increasingly important. Good co-ordination between the various
bargaining levels at the national level is not enough. The European context must be
taken into account.
The ETUC and its industry federations, concerned about the prospects for ‘social
dumping’ that an intensification in multinational company (MNC) benchmarking might
encourage, have also begun to put in place procedures for European-wide co-ordinated
bargaining. As Fajertag (2000: 11-13) reminds us, the 9th ETUC congress in Helsinki in
June 1999 adopted a specific resolution on the ‘europeanisation of industrial relations
which stresses the need for the European trade union movement to act swiftly to put in
place instruments and procedures to promote co-ordination of collective bargaining now
that the euro-zone is a reality’. At sector level, deemed to be ‘essential in collective
bargaining co-ordination’, the ETUC’s industry federations are to create the requisite
structures and instruments, adapted to the needs of the sector concerned’. At the multisector level, the ETUC will be ‘competent for overall co-ordination, providing the
necessary framework to guarantee the overall coherence of the process. To this end an
ETUC Committee for collective bargaining co-ordination has also been created’.
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Two of the ETUC’s industry’s federations, the European Metalworkers' Federation
(EMF) and the European arm of the International Federation of Commercial, Clerical,
Professional and Technical Employees (EURO-FIET1) had already adopted a ‘coordination approach’ based on the definition of cross-European guidelines and minimum
standards (for further details, see Marginson and Schulten, 1999). Other industry
federations following suit in 1999 were the European Trade Union Federation-Textiles,
Clothing and Leather and the European Graphical Federation. The European
Federation of Building and Wood Workers has taken a slightly different approach,
encouraging the formation of cross-border bargaining partnerships in sub-regions of the
EEA to co-ordinate bargaining on matters such as welfare and holiday funds where
there is significant cross-border movement of workers (Lubanski, 2000).
Paralleling these developments, most EU countries have experienced within their
national systems what has been described as ‘centrally co-ordinated decentralisation’
(Ferner and Hyman, 1992: xxxvi) or ‘organised decentralisation’ (Traxler, 1995). A
variety of developments are covered, depending on the initial degree of centralisation.
At their heart, however, has been the devolution of functions from higher to lower levels
of the system — it may take the form of greater flexibility of negotiations over pay or
working time or responsibility for introducing major restructuring programmes within
guidelines. Especially noteworthy is that in most cases this devolution has involved
giving negotiators at company level greater responsibility, leading to a debate about the
long term future of the multi-employer bargaining that has been the predominant pattern
in Europe (see, for example, Martin, 1998; Traxler; 1998a; Sisson et al., 1999b).
The prospect that co-ordinated bargaining might come to play a key role in European
industrial relations — that co-ordinated bargaining rather than collective bargaining
might even be the main process for Europeanising industrial relations — puts a
premium on an understanding what is involved. Surprisingly, however, with a few
1
In 2000 EURO-FIET became UNI-Europa following the merger of the international trade unions for
finance/commerce, telecommunications and the media to form the Union Network International (UNI).
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honourable exceptions such as Traxler (1999) and Sako (1997), very little attention has
been paid to the concept of co-ordinated bargaining itself. Indeed, most commentators
have not even bothered to define what they mean, seemingly believing that the term is
self-evidently clear, which is very far from being the case. The result is considerable
differences in usage. Sometimes, for example, the term is used to denote a general
principle for organising affairs — co-ordination is the opposite of independent action.
Other times, it describes a specific process — co-ordination is an alternative to
collective bargaining. Generally speaking, too, the concern has been with the
relationship between centralised co-ordinated bargaining and pay at national level, with
little appreciation of the wider issues at stake or concern for the cross-national
implications of any analysis.
This paper draws on a wide range of experience, from the past as well as the present,
to offer a systematic overview of co-ordinated bargaining, which is defined as an
attempt to achieve the same or related outcome in separate negotiations. The
paper, which lays the groundwork for a more detailed analysis of developments in two
sectors (metalworking and financial services) and four countries (Belgium, Germany,
Italy and the UK) under the Economic and Social Research Council’s ‘One Europe or
Several’ programme, begins by seeking to clarify the different dimensions, forms and
processes of co-ordinated bargaining. It then proceeds to consider the circumstances in
which co-ordinated bargaining is practised, emphasising the key role of the negotiating
process in dealing with the collective action problem as well as the implications of
specific economic and institutional structures. In the light of the analysis, it discusses the
prospects for co-ordinated bargaining at EU levels and speculates about the form it
might take in the case of pay bargaining. The overall conclusion is that co-ordinated
bargaining is indeed likely to play a major role within the EU. The pace with which it
develops is likely to vary considerably both within and between sectors, however,
leading to multi-speed ‘Europeanisation’ and further decentralisation within national
systems.
A BASIC FRAMEWORK
As Sako (1997) and Traxler (1999) both suggest, co-ordinated bargaining is very much
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a multi-dimensional concept. It shares many similarities with collective bargaining, but
there are also significant differences. As Sako (1997: 40) writes, frustrated at the
continuing use of ‘simple three point scales’ and ‘stylised facts’ in the ‘centralisationdecentralisation’ debate:
Co-ordination is certainly a more nebulous concept than bargaining structures or
bargaining levels because it is about the process of information exchange,
consultation, negotiation, decision-making and the exercise of sanctions over those
who break any joint agreement…Operationalising the concept of co-ordination
involves tracking both the formal and informal occasions for information exchange
and decision making.
Even though co-ordinated bargaining may be a nebulous concept, there is, nonetheless,
a number of dimensions that it is useful to identify. A fundamental distinction is between
the horizontal and vertical dimensions. The horizontal dimension refers to co-ordination
between bargaining units at the same level, which are independent of one another. The
vertical dimension2 covers co-ordination between bargaining units at different levels
where there is a dependency relationship and bargaining outcomes at the subordinate
level conform to the principles or parameters agreed at a higher level. In addition to this
basic distinction, further variation in co-ordinated bargaining is evident according to the
levels at which it occurs, the forms that it takes, the processes involved, and the depth
of co-ordination.
A range of levels
Coverage
Like collective bargaining, co-ordinated bargaining can be either single-employer or
multi-employer in its coverage. The single-employer can be single business covering
one division of the company’s activities or multi-business covering them all. The multiemployer can be single sector or multi-sector. It may, for example, involve an individual
2
There is an argument, following Sako (1997: 21), for reserving the term vertical coordination for the links between
buyer and suplier companies on the grounds that the term vertical integration is well-established in the industrial
economics literature. Since this is not our main focus, however, and since Traxler (1998: 6) and others have used the
term in connection with the collective action problem, it seemed sensible not to confuse matters still further by trying
to come up with an alternative lable for the latter.
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sector such as metalworking or a number of sectors. It may even embrace private
sector industries and public sector services.
Agency
In the case of employers, co-ordinated bargaining can be ‘associational’ or ‘nonassociational’
depending
on
whether
employers’
organisations
or
company
management are responsible. In the case of employees, co-ordinated bargaining can be
organised by trade unions and/or work councils, depending on country. It can also be
single union or multi-union reflecting the coverage, the levels and the patterns of
representation. To complicate matters further, both national and international
federations of employers’ organisations and trade unions may be involved to which the
individual company or trade union member is not directly affiliated.
Geographical reach
The various dimensions of single-employer and multi-employer co-ordination can be
either single-country or multinational in their geographical reach, with different
possibilities in either case. Thus, single-country co-ordination can take place on a
district or regional or national basis. Multi-country co-ordination can take place at the
level of the region (the Scandinavian countries, for example, or Germany and the
Benelux countries) or at the level of the SEM, within that amongst the countries
comprising the Euro-zone, or beyond that across the continent (for example, embracing
the accession as well as the member states). In the case of the MNC with operations in
each of the major continents, it can even be global in its reach.
A range of forms
A range of forms of co-ordinated bargaining can be distinguished. Listed below are the
three main ones, together with their sub-forms. The first two forms are voluntary
initiatives of employers and/or trade unions, whereas the third form is state imposed.
Unilateral co-ordination
In many countries, collective bargaining initially emerged on a local basis as a direct
result of societies of craftsmen seeking unilaterally to co-ordinate the fixing of pay and
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conditions (see, for example, Clegg et al., 1964; see also Sisson, 1987). Indeed, in the
UK, the first national agreement in the engineering industry, the famous ‘Provisions for
Avoiding Disputes’ of 1898, emerged in just this way. The Amalgamated Society of
Engineers (ASE) sought to introduce an eight-hour day using a ‘rolling strike’ to impose
their demands on individual employers. The newly formed Employers’ Federation of
Engineering Associations responded with a lockout that gained support across the
country. The price of calling off the lockout was the ASE’s acceptance of a wide-ranging
statement of the employer’s right to manage and a detailed national procedure imposing
a ‘straitjacket of national control’ (Wigham, 1973: 63). Even so, more than half a century
later, Brown (1973) was able to report that a common rate for tool room workers was
rigorously enforced on engineering employers in the Coventry district by shop-floor
trade union organisations.
Yet employers are as much involved in co-ordinating bargaining outcomes as trade
unions. Germany provides us with an example on the multi-employer dimension.
Superficially, collective bargaining in Germany is relatively decentralised. The two ‘peak’
confederations of employers’ organisations and trade unions, the BDA and the DGB, do
not negotiate agreements with one another. More unusually, there is not even a sector
agreement at national level in metalworking, the negotiations seemingly taking place at
Land level. In practice, however, these decentralised negotiations have been highly coordinated on both the employers’ and trade unions’ side for nearly half a century,
manifesting itself in the ‘pattern bargaining’ described in a later section.
Moreover, unilateral management co-ordination is to be found in even the most
decentralised of national systems such as the UK’s. In Sisson and Storey’s (2000: 201)
words:
To put it bluntly, much of the decentralisation that has taken place [within
companies] is an 'illusion'. Things may 'happen' at local level, but they are not
'decided' there. Many of the key issues of employment relations policy are likely to
be determined at higher levels in the organisation. Shifts towards harmonisation or
the introduction of quality circles or TQM are good examples. The same is true of
specific conditions of employment.
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There is also a growing body of evidence suggesting substantial cross-national coordination within large MNCs. Put simply, pressure from headquarters management for
improvements in performance based on ‘best practice’ is leading to the adoption of very
similar practices across countries. A recent study of so-called pacts for employment and
competitiveness (PECs) found similar arrangements for team working, annualised hours
and overtime ‘corridors’ in national subsidiaries of the same company (Sisson and
Artiles, 2000). Significant, too, is the context in which these practices had been
introduced. Typically, national negotiators had been left in no doubt that a failure to
introduce them would lead to the withdrawal or postponement of investment in favour of
subsidiaries in other countries. Hanké (2000: 45) describes developments at General
Motors’ operations in Belgium, Germany, Spain and the UK in 1998:
The competitive dynamic underlying the process explains this convergence.
Management would start by singling out one plant as a pilot bargaining arena for
changes in working time or work organisation. The agreement concluded in this
'most favourable' setting (for management) was then, in the next round,
presented to every other plant in the company as a minimum standard. These
other plants had no alternative but to follow suit, since they might otherwise find
themselves in an unfavourable position in the next round of model planning.
Collaborative co-ordination
Co-ordination can be on a bi-partite basis, aiming to lay down a framework or shape the
parameters within which collective negotiations at lower levels take place. In the case of
bipartite multi-employer co-ordination, Austria provides us with one of the best
examples. As Traxler (1995; 1998b) explains, for a long period after World War II, coordination across sectors was mainly performed by the Parity Commission and was
based on the sector bargaining parties' obligation to apply jointly for the Commission's
approval before renegotiating agreements. Since the early 1980s, Austria has
undergone what Traxler (1998: 256-7) describes as “organised decentralisation’ that is,
a step-wise shift to lower bargaining levels, while retaining macro economic coordination. In essence, the Parity Commission provides the formal opportunity for
regular dialogue, but it is the ‘peak’ organisations of employers’ organisations and trade
unions (the BWK and ÖGB respectively) that have de facto responsibility. The
mechanism, however, is not agreements between the ‘peak’ confederations themselves,
but ‘pattern bargaining’ at sector level based on metalworking. The agreements
negotiated by the two main unions involved, the GMBE and the GPA (representing blue10
and white-collar employees respectively and covering around 17 per cent of all
employees subject to bargaining rights) define the framework for other bargaining
groups, including those in the public sector. Significant too is that co-ordination does not
just take place over pay. A series of sector agreements in the 1980s represented a
further step towards decentralisation by combining a cut in working time with opening
clauses allowing management and works council to negotiate over flexible working-time
schedules.
Alternatively, the government can join with employers’ and trade union representatives
as a third party. Probably the best example of tripartite multi-employer co-ordination is
the Netherlands. As Vissser (1998: 300-1) explains, since the Wassenar Agreement of
1982, there have been some 70 agreements, understandings and joint opinions
emanating from the Foundation for Labour, which along with the Social-Economic
Council is the main vehicle for multi-sector social dialogue. At the risk of oversimplification, two main features characterise this output (Huiskamp and Louise, 2000).
The first is the wide range of substantive issues covered. In effect, wage moderation
has been exchanged for reductions in social charges and wide range of improvements
in employment policy. The second is the process of implementation. Many of the
Foundation’s agreements, understandings and joint opinions, which are usually couched
in general terms, are essentially recommendations to negotiators at sector and
company levels, who have the opportunity to adapt them to their particular
circumstances. In Visser’s words (1998: 306): “Central accords are not instructions
which must be applied but guidance to lower-level negotiators with considerable ‘moral’
weight’’.
At sector level, there have been growing moves towards ‘organised decentralisation’ in
collective bargaining in a number of countries. Sector-level agreements are increasingly
taking the form of framework agreements responsible for minimum standards and broad
parameters within which detailed collective negotiations subsequently take place at the
enterprise level to implement these. For example, in Germany, this is an approach that
has become increasingly widespread as a means of regulating working time, originating
in the 1984 agreement shortening the working week in metalworking. It has been taken
further in the chemical sector, where the 1999 sector agreement provided for the
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application in enterprise-level negotiations of a corridor principle establishing maxima
and minima for working time. In Denmark, sector-level negotiations now focus on
movements in the overall pay bill, leaving its determination in terms of actual increases
in rates of pay to enterprise-level negotiations. In effect the sector agreement becomes
a co-ordinating framework in each of these instances.
In the case of single-employer bilateral co-ordination, the European Foundation PECs
study found widespread use of enterprise framework agreements leaving detailed
implementation to individual business units within a single enterprise. An excellent
example is Air France’s ‘Accord Pour un Développement Partagé. This has been
publicised as an agreement trading off a reduction in working time against the creation
of 4,000 new jobs in line with the loi Aubry. Critically, however, as Mériaux (1999)
reminds us, the achievement of this objective depends on local agreements in 26
establishments dealing with the flexibility of both work organisation and working time.
State-imposed co-ordination
Belgium provides us with an instance of the third main form of co-ordination. There had
been a long-standing tradition of bi-partite multi-sector agreements, at the apex of what
has been described as a ‘pyramid of negotiation’ (Vilrokx and Van Leemput, 1998: 318),
involving subsequent negotiations at sector and company levels. In 1996, following the
failure to achieve a tri-partite ‘Contract for the Future on Employment’, the government
unilaterally introduced three framework laws covering the main points of the
negotiations. Most strikingly, the structure links sector wage negotiations to those in its
main trading partners, France, Germany, and the Netherlands. Basically, it establishes a
range within which pay increase may be negotiated for the coming two years: the lower
limit is set by index-linked cost of living and incremental rises and the upper by the
weighted average of expected pay rises in the three neighbouring countries.
A range of processes
Co-ordinated bargaining does not just involve a number of forms. There is also a range
of processes, especially in the case of the unilateral form, to which our attention turns.
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Information exchange
The management of MNCs, employers’ organisations and trade unions have routinely
collected information from their subsidiaries/members about the levels of pay and
conditions. At the time of negotiations, they have usually looked beyond this inner circle
to other sources. Typically, employee representatives have concentrated on favourable
cases of pay and conditions, while their employer counterparts put the attention on
productivity and costs. Co-ordinated bargaining imposes additional requirements,
however. In the words of the Euro-FIET issues paper prepared in collaboration with the
Labour Research Department (1999):
Effective co-ordination requires good quality information provided rapidly to those
who need it. It also requires a high level of mutual understanding of what is possible
in the different circumstances in which each affiliate is operating.
A particularly interesting case that one of us came across in researching decision
making in highly decentralised UK companies involved what can best be described as
an ‘approval notice system’. An agreed list had been drawn of key issues such as the
basic working week. Any unit that wished to make an amendment, either for its own
reasons, or under pressure from its employee representatives was obliged to circulate
the details to their colleagues in other units. These colleagues then had seven days to
say whether or not the proposed changes would embarrass them in any way. If the did,
the unit would not go ahead until the arrangement had been sanctioned by
headquarters.
Benchmarking
This started life as a technique for improving management performance (see, for
example, Department of Trade and Industry, 1997a and b; UNICE, 1998), where its
consequences within large multi-establishment, and multinational, companies for the
management of industrial relations have been recognised for some time (Marginson et
al., 1993; Mueller and Purcell, 1992). Increasingly sites within the same company, at
different national and international locations, have found themselves the subject of
benchmarking exercises in terms of absenteeism, labour turnover, labour productivity
and unit labour costs. Such exercises entail a dual incentive/coercion dynamic: on the
one hand, poorly performing sites are encouraged to emulate ‘best practice’
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developments at more successful locations whilst, on the other, comparisons are used
coercively to threaten withdrawal of investment from poor performers unless
performance improves. Recently, however, benchmarking has assumed a wider
application. Thus the European Commission’s higher level group on restructuring (CEC,
1998b: 11) sees benchmarking as having a critical role to play in social policy:
… the best means of spreading good social practice in business is to encourage
companies to report publicly on their practices and policies in a structured manner in
a managing change report, that is, an annual report on employment and working
conditions. This voluntary process would allow best practice to be disseminated
widely and, through benchmarking, comparison and sharing of information, all
companies would be encouraged and helped to improve their policies and
procedures (CEC, 1998b: 11).
In effect, benchmarking has also become the principal tool of the EU’s employment
strategy (CEC, 1998a).
For many employer and trade union negotiators, perhaps the only thing new about the
process is the label. Comparisons have been the lifeblood of collective bargaining, the
levels of pay and conditions of workers in the same union or company or sector being
especially prominent. Indeed, in Ross’ (1948) famous words, these have been seen as
‘coercive comparisons’, simultaneously fuelling workers’ demands for equity and
allowing management to justify their concession on market grounds.
Target setting
In practice, the dividing line between benchmarking and target setting is rather blurred.
Whereas benchmarking can amount to little more than drawing up a ‘wish list’, however,
‘target setting’ is much more specific. Basically, it involves identifying a particular
practice or level of pay or working time to be sought/avoided and a commitment on the
part of negotiators to pursue/prevent its incorporation in their agreements.
For example, in June 1998 the EMF executive committee adopted a European charter
on working time in which the EMF affiliates agreed on a maximum working time of 1,750
hours per year as a European minimum standard. In December 1998, the EMF adopted
a resolution on ‘Collective bargaining with the €’, which includes a "European coordination rule" for national bargaining. The resolution states that:
14
The key point of reference and criterion for trade union wage policy in all
countries must be to offset the rate of inflation and to ensure that workers'
incomes retain a balanced participation in productivity gains. The commitment to
safeguard purchasing power and to reach a balanced participation in productivity
gains is the new European co-ordination rule for co-ordinated collective
bargaining in the metal sector all over Europe. Only once this objective has been
achieved throughout Europe in accordance with the relevant applicable
conditions can wage dumping be eliminated and the continued redistribution of
income to the detriment of workers be stopped (for further details, see EIROnline,
DE9812283F).
Pattern bargaining
In this case, an attempt is made to achieve the target in a specific set of negotiations,
which becomes the ‘key’ or ‘pilot’ agreement. Negotiators in other workplaces,
companies or sectors are then expected to take advantage of the bridgehead to extend
the pattern across the relevant area.
‘Pattern bargaining’ has long being associated with the automotive and steel industries
in the USA (see, for example, Seltzer, 1951; Levinson, 1960). It is not just a US
phenomenon, however. As Traxler (1998b: 1999) observes, ‘pattern bargaining’ has
been intrinsic to collective bargaining in Austria and Germany for many years. In both
countries, negotiations in the metalworking sector tend to set the ‘pattern’ for other
sectors. Indeed, in Germany there is in effect a double process. Sector negotiations in
metalworking, as noted earlier, take place at the level of the Land. An initial ‘pilot’
agreement in negotiations in one of the Land (usually Baden-Württemberg) sets the
pattern, which is spread, first, across metalworking country-wide and, second, other
sectors.
In 1989-90, the UK engineering industry was the scene for a classic attempt at pattern
bargaining reminiscent of the events leading to the first national agreement described
earlier. Following the breakdown of negotiations at national sector level over a reduction
in the working week, the Confederation of Shipbuilding and Engineering Unions shifted
the focus to individual companies to achieve its objective using the ‘rolling strike’.
Having levied its members throughout the industry to set up a sizeable strike fund, it
targeted a number of individual high profile companies in a series of 'waves'. It then
15
conducted strike ballots in these companies, threatening to use the proceeds of the levy
to pay substantial strike pay to the members involved. Having established the pattern in
some companies, it then moved on to the companies in the next ‘wave’ and so on. The
result was a reduction of the working week throughout significant parts of the
engineering industry.
Synchronised bargaining
This term is often used fairly loosely as an alternative for co-ordinated bargaining.
Strictly speaking, however, it should be reserved for negotiations in a number of
companies and/or sectors taking place more or less simultaneously around a common
platform. Perhaps the most celebrated case is that of the so-called Shunto or ‘Spring
offensive’ in Japan. Sako (1997) provides us with a detailed account of the 1993-94
round to illustrate what typically happens. The overall process began in November
1993, when the ‘peak’ organisations of employers (Nikkeiren) and trade unions (Rengo)
held a meeting to discuss the state of the economy. Thereafter, the two parties decided
their positions in close association with their affiliates, with the larger companies playing
a key role in some sectors on the employers’ side. Negotiations began in February 1994
when the mainly enterprise unions presented their claims and were completed by the
end of March. The precise arrangements differed from sector to sector as did the
outcomes; for example, in textiles and private railways, there were sector level
negotiations but enterprise level agreement; in electrical machinery, electric power, iron
and steel, and shipbuilding and heavy machinery, there was sector level co-ordination
and enterprise level agreement. Throughout the period of negotiations, Nikkeiren and
Rengo met and exchanged information and opinions about the state of developments,
leading to an adjustment in the trade union position.
Depth of co-ordination
The depth of co-ordinated bargaining arrangements is reflected in two considerations:
the range of issues covered and the extent to which co-ordination can be enforced.
The subject matter of co-ordinated bargaining
It is no surprise that pay and working time loom so large in the examples of co-ordinated
16
bargaining. To paraphrase Brown and Walsh (1994: 437), being quantifiable, and thus
generalisable across all manners of jobs and employees, they are the common focus
and language of policy makers, practitioners and commentators alike. More
fundamentally, pay and working time are at the heart of the employment relationship.
Working time targets can variously be expressed in terms of weekly working hours,
holiday entitlement or, as in the case of the EMF’s charter, as an annual total.
In the case of pay, four main targets are to be found. The first is the level of pay. Just as
the level of pay was the main interest of the craft societies in the 19th century, so today it
is of management consultants such as Hay, Mercer, Towers Perrin and Watson Wyatt,
selling pay data for benchmarking purposes (UNI-Europa, 2000). The second is a
minimum level of pay, although in many EU member states this is provided for by
legislation. The level of increase in pay is the third, which has dominated the
‘centralisation-decentralisation’ debate. This would be true of the Austrian and German
examples quoted earlier along with the ETUC and its industry federation proposals for
cross-national co-ordination. The fourth is the level of increase in the total pay bill. Sako
(1997: 14-5) argues that this is a key feature of Shunto in Japan, helping management
to reduce the scope for ‘drift’ as a result of the system of seniority-plus-merit pay and
the more or less automatic linkages between increases in managerial and nonmanagerial pay. At single-employer level, many large companies in the UK are reported
to operated tight central control over the overall pay bill of their business units, leaving
business unit managers with the discretion to juggle headcount, pay increases and
productivity improvements (Marginson et al., 1993).
It is important to note, however, that co-ordinated bargaining is not just about pay or
working time has already been noted amongst PECs on a single-employer basis and in
the cases of Austria and the Netherlands at a multi-employer level. To emphasise the
point, Table 1 gives an impression of the subjects that have been subject of coordinated bargaining in the Netherlands in recent years in the area of employment and
competitiveness.
17
Table 1 Areas of recommendations of Foundation of Labour in collective
agreements dealing with employment and competitiveness
Employment
Competitiveness
employment guarantees
Wage moderation
employment schemes
Individual and flexible
- structural jobs
Early retirement schemes
- temporary jobs
- other schemes
general and job-related training
Performance related wages
employability
Working time flexibility
improving flexible jobs
Other forms of flexibility
improving jobs employees 50+
Source: Huiskamp and Looise, 2000 based on data from BedrijvenBond CNV.Table 1
Enforcement
This is an area where there is very little information. Two things seem clear, however.
On the face of it, many of the factors deemed important in securing compliance in the
case of collective bargaining or principal-agent relationships have a relatively limited
role to play. Take sanctions. They may be relevant in the case of single employer coordination, where large companies have a range of controls, formal and informal, to
ensure that local managers follow the line. They may be important in helping to explain
specific cases, for example Austria, where Traxler (1998b: 252-3) reminds us that
membership of the Federal Chamber of Business, the BWK, is compulsory and the
trade union confederation, ÖGB, ‘exercises control over the entire system of union
finances’ (ibid: 247). Elsewhere, however, above all in the case of multi-employer coordination, sanctions can only be exercised sparingly — too many expulsions, for
example, can turn out to be a self-inflicted wound.
18
The second is that much of the effort seems to go into what Walton and McKersie
(1965) term ‘attitudinal structuring’ so that proposals assume Visser’s ‘considerable
‘moral’ weight’’. Full discussion and regular meetings seem to help here. Regular
meetings not only have the value of exchanging information but also of allowing people
to make contact on a personal basis and discuss the specifics of any particular issue.
Other devices include presence at one another’s negotiations — in Shunto, for example,
there is sometimes resort to a so-called ‘milk-round session’ in which officials from a
number of enterprise unions may be present in each set of key company negotiations.
Regular monitoring and review also feature, their purpose being to introduce an element
of shame into the process rather than a precursor to the exercise of sanctions. Similar
processes are evident in the inter-regional co-ordination of bargaining in the
metalworking sector involving the relevant trade unions from Belgium, the Netherlands
and the North Rhein-Westphalia region in Germany (Gollbach and Schulten, 2000).
In the case of collaborative co-ordination, several correspondents in the European
Foundation’s PECs study drew attention to the importance of involvement and
participation.
In
discussing the
Lufthansa
case,
for example,
the
German
correspondents made the following point:
During the restructuring process at Lufthansa, elaborate communication and
participation structures, most elements of which had specifically been developed,
significantly contributed to communicating and legitimising the restructuring
measures and finally to make the whole process a success. During the process,
employee representative have been informed and consulted about steps to be
taken. The trade unions and the works councils made suggestions, also in the
context of the restructuring process. They also had a considerable influence on the
contents of the agreements (Schulten et al., 1999).
In the case of tri-partite co-ordination in the Netherlands, Visser (1998: 305-6) suggests
that co-ordination is enhanced by the period of preparation for what remains a largely
annual cycle:
Bargaining starts with the drafting of ‘proposals’ by the leading unions during the
summer, followed by lengthy discussions in the federations and quasi-negotiations
in the StAr (the Foundation for Labour) and the SER (the Social-Economic Council);
then there are meetings with the government in the autumn, re-statement of
proposals in sectoral forums and finally the actual negotiations early in the new
19
year. The distance between negotiators — physically, socially and ideologically — is
small.
THE CIRCUMSTANCES IN WHICH CO-ORDINATED BARGAINING IS PRACTISED
Co-ordinated bargaining takes place in one of two main types of situation, reflecting the
first two of the three main forms described earlier. The first is where one or other of the
parties is opposed to collective bargaining and/or believes it unnecessary. The second
is where the parties develop an understanding, which may be tacit rather than explicit,
that co-ordinated bargaining is likely to open up options that would not be available
under collective bargaining arrangements centralised at the same level. In both cases,
there is a need to understand why employers and not just trade unions incline to the
‘common rule’ in matters of pay and the conditions of employment. There is also a need
to appreciate the key role of the negotiating process in dealing with the collective action
problem, as well as the implications of specific economic and institutional structures.
The significance of the ‘common rule’
To paraphrase Traxler (1996: 31-2) in discussing the logic of concertation, trade unions
might be expected to pursue the ‘common rule’ in matters of pay and conditions. It is not
just a matter of equity and fairness. The ‘common rule’ is fundamental in preventing
under-cutting and has been the driving force behind the promotion of multi-employer
collective bargaining as well as statutory minima.
Employers, on the other hand, might be expected to be much less inclined towards a
common approach in view of their expressed needs for diversity and flexibility. In
practice, however, despite the rhetoric to the contrary, there are powerful forces leading
managers to do so. These reflect the pressures deriving from the operation of two types
of so-called ‘isomorphism’ (Dimaggio and Powell, 1991). The first, ‘competitive
isomorphism’, assumes a system of rationality presupposing market competition. As
Adam Smith famously remarked in The Wealth of Nations more than three hundred
years ago:
20
We rarely hear, it has been said, of the combinations of masters, though frequently
of those of workmen. But whoever imagines, upon this account, that masters rarely
combine, is as ignorant of the world as of the subject. Masters are always and
everywhere in a sort of tacit, but constant and uniform combination, not to raise the
wages of labour above their actual rate. To violate this combination is everywhere a
most unpopular action, and a sort of reproach to a master among his neighbours
and equals. We seldom, indeed, hear of the combination, because it is the usual,
and one may say the natural state of things, which nobody ever hears of (Penguin
Classics edition, 1973: 169).
Even in situations where there is considerable decentralisation of collective bargaining,
dealing with common pressures, such as increasing demands for customisation or
tighter deadlines, can lead to the adoption of similar technologies, work organisation
and therefore conditions of employment (Arrowsmith and Sisson, 1999; Teague, 2000).
The second type, ‘institutional isomorphism’, involves three main mechanisms:
‘coercive’ stemming from macro- and micro-political pressures; ‘mimetic’ leading to the
adoption of standard (‘fashionable)’ responses to uncertainty; and ‘normative’
associated with the ‘professionalisation’ of management. In the first instance, managers
may find themselves constrained to adopt standard arrangements as a result of the
‘coercive comparisons’ applied by headquarters management. In the second,‘mimetic
isomorphism’, the pursuit of ‘best practice’ has become intrinsic to the management
process as the authors have observed in discussing the situation in MNCs:
A growing number of MNCs have put in place management systems and structures
to diffuse best examples of working and employment practice across sites in
different European countries. Such systems include the regular convening of
meetings of production and personnel managers from sites in different countries,
rotation of managerial personnel from one site to another, compilation of manuals of
best practice and the assignment of a corporate management task force with a
specific remit to identify and diffuse examples of best practice across sites.
(Marginson and Sisson, 1998: 515; see also Coller, 1996).
The designation ‘best practice’ gives solutions significant legitimacy, especially if they
come to be incorporated into the prescriptions of consultancy and professional
organisations, thereby attaining normative status. Not only can this be a lever in helping
managers to persuade uncertain employee representatives of the appropriateness of
proposals, but also a defence in the event of criticism from headquarters management.
21
The significance of the negotiating process
In any social relationship where collective action is an issue the negotiating process
assumes considerable significance in understanding the outcomes that emerge. Two
main dimensions of such collective action may be identified. In the case of two
individuals, it is simply the horizontal that is involved — A has to reach some
accommodation with B and vice versa. In the case of the relationship where A and B
involve more than two individuals, however, there is a vertical as well as a horizontal
relationship: the groups comprising A and B have to reach some accommodation
among themselves about how they are going to deal with the other.
A number of different theoretical frameworks bear on the issues. In our experience,
however, the most useful is that of Walton and McKersie (1965) to which reference has
already been made. Although the framework is cast in the context of industrial or labour
relations, it is applicable to social negotiations in general. It is also comprehensive in its
coverage, embracing the essence of a number of approaches. An overview is given in
Box 1. It will be seen that two main sub-processes are involved in the case of the
horizontal dimension of collective action, ‘distributive bargaining’ and ‘integrative
bargaining’, depending on the nature of the issues. ‘Intra-organisational bargaining’
relates to the vertical dimension of collective action. There is also a fourth sub-process,
‘attitudinal structuring’, which captures the key point that the negotiating process is as
much about influencing on-going relationships as it is about resolving a particular issue.
The point that many commentators have failed to recognise is that co-ordinated
bargaining can bring benefits to one or other or both the parties in handling social
relationships on both the vertical and the horizontal dimensions. In either case, the
position of representatives at company or business unit levels is very often the key, as
will be argued in more detail below.
Unilateral co-ordination
In the case of the single-employer dimension, it may appear contradictory for
management to insist on decentralised bargaining and yet to retain a significant degree
of central control. It is perfectly sensible, however, given the ‘tight-loose’ problem
22
headquarters managers have to grapple with. It is not just that decentralisation denies
the union a platform to raise a number key ‘distributive bargaining’ issues such as
overall investment or that it complicates ‘intra-organisational bargaining’ within the
union. It can also be used to promote ‘attitudinal structuring and ‘integrative bargaining’:
targeting local union representatives encourages greater identification with the
business, along with recognition of the importance of the ability to pay. At the same
time, however, concessions made in one unit can have extremely costly repercussions
in others, leaving the company wide open to 'leapfrogging' claims by trade unions.
The relationship between headquarters and business managers too can be understood
from the perspective of the negotiating process. Decentralisation is critical to
maintaining the principle of business managers’ bottom line responsibility, especially as
even the smallest differences in products or services can give rise to the need for
different working arrangements. Yet, at the same time, business unit managers cannot
be expected to have the time or the expertise to do the long-term 'strategic' human
resource management thinking required to develop ‘best practice’ in every area of
activity. It is not very efficient for them to try to do so either in the large organisation.
Of course, it is not always a question of management opposition to collective bargaining
leading to trade unions co-ordinating bargaining. There can be situations where the
shoe is on the other foot. In the case of differences in the levels of pay across the multibusiness company, for example, employee representatives may be concerned that it
may mean holding back workplaces with superior levels until the others have caught up,
which could have major repercussions for ‘intra-organisational bargaining’. Employee
representatives, like managers, may also be concerned that company-level negotiations
will significantly affect power relationships — for example, individual representatives
may be concerned about the loss of personal power and status. As will argued below,
there may be situations where the union would prefer to engage in ‘pattern bargaining’.
In case of the multi-employer dimension, co-ordinated bargaining can have advantages
for both employers and trade unions. As Ulman (1974: 103-5) has argued, this is above
all true of highly concentrated industries, helping to explain why these feature strongly in
the examples of ‘pattern bargaining’. It is not just that ‘company-level bargaining gives
23
the industry-wide (national) union a whip-saw advantage: it can strike one company in
order to set or maintain an industry-wide pattern, while that firm’s competitors remain in
operation and while the union members in their employ continue to draw pay (and
replenish the strike fund)’. Unlike in small-scale highly competitive industries, ‘where
tolerance of cost differentials for even limited periods of time is very narrow’, the union
also has greater scope to discriminate. It may, for example, seek to impose a so-called
‘pattern-plus’ settlement on some following firm (for further details, see Livernash, 1963:
23) or it may agree to a settlement below the pattern where closure an/or loss of jobs is
a serious prospect. Important too is that in each case the members are directly involved
in the negotiations, thereby helping to overcome some of the problems of ‘intraorganisational bargaining’ when national officials are responsible.
Critically important for employers is that each company is in greater control of its own
destiny. Each company can play it slightly differently in terms of the quid pro quos it
seeks for following the pattern. Each company may even play it slightly differently in the
case of its approach to the pattern. Stronger companies make seek to exploit their
ability to pay to embarrass their competitors. Weaker ones may be able to use the threat
of job loss to get exemption from the pattern. Depending on the strength of the trade
unions, companies may not even have to agree a common line, thereby side-stepping
the issue of ‘intra-organisational bargaining’ altogether.
Metalworking in Germany offers an interesting case of co-ordination at the sector level
that confirms the importance of co-ordinated bargaining in helping to deal with the
problems of ‘intra-organisational bargaining’. It was trade unions and not employers who
halted a trend towards national negotiations in the late 1950s and early 1960s. In the
late 1960s, the leadership of IG Metall was criticised by its members for its excessive
centralisation and its involvement in 'concerted action'. This criticism intensified in 1969:
an 8 per cent wage settlement was rejected by members and there was widespread
unofficial industrial action in September, forcing trade union negotiators to go back to
the employers. In the light of this experience, IG Metall decided regional negotiations
would be more appropriate in future. In this way the leadership hoped to meet the
demands for more membership participation and a more decentralised wage policy. It
was also argued that regional negotiations would allow a more active policy to be
24
pursued: attempts could be made to achieve a breakthrough in the more profitable
regions, and those where IG Metall membership was strong, which could then be
imposed on the other member organisations of Gesamtmetall.
For their part, the employers did not feel able to reject trade union demand for regional
negotiations. Other things being equal, they would have preferred negotiations at the
national level because of the problems of co-ordination that the vigorous pursuit of
regional bargaining involves. At the same time, however, regional negotiations helped to
reduce the scope for workplace bargaining as well as, in some cases, involving an
increase in the basic rates of pay without adding to the paybill because of the earnings
‘gap’ (for further details, see Sisson, 1987: 89-90).
From this case, it is also possible to highlight some of the features that contribute to the
relative effectiveness of unilateral co-ordinated bargaining. Most obviously, there is the
strength and exclusive jurisdiction of the principal agents — Gesamtmetall, on one side,
and IG Metall, on the other. Also important are the detailed sets of rules and provision,
underpinning this ‘pattern bargaining’, above all on the employers’ side, covering
minimum/maximum standards (for example, the so-called tabu-katalog or ‘taboo list of
the BDA) and internal relationships between members (for further details, see Sisson,
1987). As in the case of Shunto in Japan, a considerable learning process also been
involved, the arrangements having been developed over a considerable number of
years.
Collaborative co-ordination
There has been fierce debate over the nature of ‘social pacts’ - whether they are to be
seen as examples of ‘corporatism’, ‘competitive corporatism’, ‘post corporatism’ or
whatever (see, for example, the review in O’Donnell, 2000; see also Rhodes, 1997;
Compston, 1998; Ebbinghaus and Hassel, 2000). In the circumstances, it might be
thought to be stretching the point to suggest that there is a common thread between coordination at this macro-level and the micro-levels of single employer company coordination referred to earlier. Arguably, however, there is. As Traxler (1997: 9-30)
reminds us, notwithstanding the supposed decline of Keynesianism, advanced societies
are experiencing a growing need for concertation. The same can be said of the large
25
corporation. This is partly because functional specialisation intensifies the interdependence of the sub-systems so that 'reciprocal co-ordination becomes increasingly
important' and partly because changes in the world economy, manifest 'above all in the
stronger pressure for a restructuring of production systems’, are leading to pressure for
fundamental changes in existing arrangements.
In these circumstances, it is the dynamics of the negotiating process that encourages
the involvement of representatives at lower level. Traxler (1997: 33-4) suggests that,
along with the widening of the agenda, decentralisation is one of the ways in which the
principals cope with a situation where the scope for the achievement of compromises
bringing ‘effective and unequivocal gains in the short term’ is limited. Following Crouch
(1993) and Crouch and Traxler (1995), Traxler argues that extending the agenda means
‘the greater the number of topics included in the negotiations, the greater will be the
chance of finding a compromise through generalised process of exchange’.
Furthermore, he adds, the ‘downward extension of concertation means that between the
collective partners a framework only is concluded, leaving the detailed regulation of
these questions to the parties in the workplace … [making] it easier to achieve
compromises insofar as it is easier to reach a consensus over framework agreements
than questions of detail’.
Arguably, however, it is not so much the narrow scope that exists for compromise that is
the driver. Rather it is the devil in the detail of very complex issues. At company level,
these can include fundamental changes in work organisation and working time
arrangements, coupled with the handling of substantial redundancies and guarantees of
employment security. At national multi-sector level, they can cover employment policy
and social protection arrangements as well as issues more traditionally associated with
the employment relationship. Following Walton and McKersie (1965), complexity
encourages a shift in strategies and tactics from those associated with ‘distributive
bargaining’, where a zero-sum game is at stake, to those more appropriate to
‘integrative bargaining’, where a variable-sum game is involved. Yet, the greater is the
complexity, the greater is the collective action problem. In these circumstances,
decentralisation not only enables representatives at lower levels to tailor solutions to
their immediate situation, thereby relieving the collective action problem on the vertical
26
dimension. It also enables the principals to avoid failures to agree over the details that
often bedevil negotiations on the horizontal dimension.
Structural considerations
Our attention now briefly turns to the specific structures, both economic and institutional,
associated with co-ordinated rather than collective bargaining.
Unilateral co-ordination
A common feature of both forms of unilateral co-ordination, single employer and multiemployer, is that the same or similar operations are involved. This is most obviously true
of unilateral management co-ordination in the same company. It is no accident that
MNCs in the automotive sector are at the forefront. These are companies with highly
standardised products and highly integrated operations. Companies with highly
diversified operations are less likely to be involved.
Similarly, most forms of unilateral co-ordination on the multi-employer dimension involve
companies in the same industry. Noteworthy too is that most of the examples of ‘pattern
bargaining’, including those of Austria, Germany, Japan and USA, involve or build on
co-ordinated bargaining in metalworking. Size and significance in the economy are
important considerations. Perhaps more important, though, is concentration. The USA
and Japanese cases are particularly insightful here. In the absence of the strong state
support for multi-employer bargaining found in Europe, employers in highly
concentrated industries such as automotive manufacturing and steel were able to resist
trade union pressures to enforce the common rule through multi-employer collective
bargaining. Trade unions were obliged to resort to ‘pattern bargaining’, subsequently
leading to ‘synchronised bargaining’ in the case of Japan (for further details, see Sisson,
1987; see also Ulman, 1974). It was a very different matter in highly competitive
industries such as clothing and printing, however. Here trade unions found employers
willing to join with them to enforce the common rule through multi-employer collective
bargaining in the interests of both market and managerial regulation.
27
Collaborative co-ordination
The trend for what the European Commission (1997) describes as ‘flexible frameworks’
rather than ‘compulsory and rigid systems’ is evident at both single employer and
national multi-sector level. As a previous section has pointed out, at single employer
level, a strong sector effect is evident, reflecting the immediate circumstances of
restructuring. Many PECs are to be found in four main sectors — recently-privatised
utilities, railways and airlines facing liberalised markets, manufacturing and banking —
companies in each of which have been experiencing considerable pressure to engage
in restructuring (Sisson and Artiles, 2000).
At national multi-sector level, some commentators have emphasised the important of
the connection between co-ordination and small country size (Kauppinen, 1998;
Fajertag and Pochet, 1997).3 Of greater importance, however, is the role of the state.
Considering the position of some of the countries that have not gone down the path of
tri-partite co-ordination can best make the point. If the authorities are not favourably
disposed to any national level activity, which is the case in the UK, it is unlikely that the
social partners will be able to engage in it autonomously. If the authorities, for whatever
reason, find it difficult to avoid intervening directly, as is the case in France, coordination is also unlikely. It is where the public authorities, as in the Netherlands, have
adopted what might be described as a ‘social partner’ role — a light touch here and a
slight withdrawal there — that tri-partite co-ordination has appeared to blossom.
THE PROSPECTS FOR EU-LEVEL CO-ORDINATED BARGAINING
Co-ordinated bargaining, it emerges, has long been a feature of industrial relations
systems. It is to be found at most levels and in countries with different institutional
arrangements. Employers and trade unions practise it in very diverse situations. It can
be unilateral or collaborative, single employer or multi-employer, bi-partite or tri-partite,
depending on the involvement of government. Rather than being a ‘second’ best’ to
collective bargaining, it is often preferred because of the scope that it allows for ‘co-
3
There are certainly cases, such as Austria, Ireland and the Netherlands, where small size may be important. Even
so, multi-sector co-ordination is not the preserve of small countries, Germany, Italy and Japan being the most obvious
examples.
28
ordinated’ or ‘organised decentralisation’ to lower levels, where the parties directly
involved can implement agreements ‘tailor-made’ to their immediate circumstances. Coordinated bargaining does not necessarily or inevitably lead to traditional collective
bargaining. At European-level, there are no intrinsic reasons in the light of this review
why co-ordinated bargaining should not play a role at the three main levels, ie the EU
multi-sector, the EU sector and the Euro-company.
What then are the prospects for the emergence of co-ordinated bargaining at any of
these European levels? Reaching an assessment of the prospects for European-level
co-ordination requires keeping in mind the possibility of either of two alternative
scenarios emerging — the establishment of supra-national structures for collective
bargaining at EU level; or unco-ordinated bargaining, in which there is neither horizontal
nor
vertical
co-ordination,
corresponding
to
Traxler’s
(1995)
‘disorganised
decentralisation’.
On the potential for supranational collective bargaining, there is now a widespread
consensus amongst commentators that under current conditions this is distinctly unlikely
to develop (see for example, Jacobi, 1998; Marginson and Sisson, 1998; Traxler, 1999).
Pay is expressly excluded from negotiations between the EU-level social partners, on
either a multi-sector or a sector basis, under the provisions of the social policy chapter
of the Amsterdam Treaty.
Moreover the collective agreements that have been
negotiated at EU level, either on a multi-sector or a sector basis, have each been
concluded under the ‘shadow of the law’ (Bercusson, 1992), whereby the Commission
made clear it would bring forward a legislative measure in the case of a failure to agree,
and been given effect through a directive and nationally implemented. There is no
indication that employers are likely to drop their long-standing reluctance to enter into
European-level negotiations, on a multi-sector or sector basis, on any matter on a
voluntary basis. Indeed, in some key sectors — including metalworking and chemicals
— employers’ organisations have so far refused to engage in processes of social
dialogue with trade unions at European level, let alone negotiation (Keller and Sorries,
1998). More generally, EU governmental and state institutions, as well as those of the
social partners, are relatively weak compared to their national equivalents — the lack of
what Traxler (1996: 289) has referred to as a ‘highly developed state protagonist’ being
29
especially critical in explaining why the parties are unlikely to be enticed into collective
bargaining.
At Euro-company level, although a small number of multinational companies have
concluded European-level agreements on industrial relations matters through their
European Works Councils, these have tended to focus on so-called ‘soft’ issues, such
as training, health and safety and equal opportunities, and taken the form of framework
agreements intended to incite more detailed negotiations at national group and business
unit levels to implement the broad principles laid down (Marginson and Sisson, 1998).
However, both management and trade union representatives across a range of
countries see collective bargaining over pay and conditions at Euro-company level,
either through or alongside European Works Councils as ‘a distant prospect’ (Marginson
and Schulten, 1999).
At first glance, the grounds for pessimism about the potential for co-ordinated
bargaining at European level might appear equally persuasive. As Traxler (1999)
observes, some of the factors which serve to preclude the possibility of supranational
collective bargaining at either EU multi-sector or sector levels apply with similar force to
the potential for realising bargaining co-ordination at European-level. Not least, as noted
above, is the fact that the central question of pay policy is formally excluded from the
range of issues which the social partners may address in negotiations under the
provisions of the Treaty’s social chapter. Many European Works Councils too, whose
formal remit extends to employee information and consultation but rarely to negotiation,
are expressly precluded from considering pay and conditions under the agreements
between management and employee representatives which establish them (Carley and
Marginson, 2000). Crucial also is the relative weakness of the European-level
organisations of employers and trade unions as compared to the their national
counterparts, and therefore their capacity to engage in and deliver bargaining coordination at European-level. This is particularly so at the sector level, which is so
important to the collective bargaining systems of many EU member states. Even if
employers’ organisations and trade unions at European-level did succeed in coordinating bargaining outcomes, the absence of effective vertical co-ordination — or
‘bargaining governability’ to use Traxler’s (1999) term — in many EU member states
30
would pose considerable challenges of implementation at national and local levels. In
which case, unco-ordinated bargaining might appear to be the most likely prospect,
characterised by concerns to achieve bargaining outcomes which secure competitive
advantage for the sector or company in the particular country and region in question,
and thereby fuel a ‘race to the bottom’.
Yet, some current circumstances would appear to be supportive of the development of
co-ordinated bargaining at European level. The well-established proposition that
industrial relations systems, including collective bargaining, follow the scope of the
market suggests that within a single European market pressures generated by
employers integrating their operations across the continent favour, albeit unintentionally,
the development of bargaining co-ordination through a process of ‘spillover’ (Teague,
2000). Important aspects of the wider context are encouraging too. Information and
opportunities for social dialogue within the EU are increasingly available through a
range of institutions and informal processes, such as benchmarking, reflecting what
Wendon (1998) has referred to as the Commission’s development as an ‘image-venue
entrepreneur’. Crucially also, co-ordinated bargaining appears to be consistent with the
subsidiarity so important to both governmental and non-governmental national
organisations.
The review of the circumstances under which bargaining co-ordination emerges within
national systems stressed that successful co-ordination does not necessarily rest on the
willingness of both parties to engage in co-ordination. Co-ordination can emerge on a
unilateral basis. At European sector level, in the face of market integration unilateral
bargaining co-ordination offers the European (trade union) industry federations a major
opportunity — indeed one might even say raison d’être — which some have been quick
to seize in putting into place procedures and adopting common ‘rules’ which
simultaneously influence national sector collective bargaining agendas and put pressure
on employers’ organisations at the European level to respond and engage with trade
unions.
At EU multi-sector level, in setting up the ECB with responsibility for setting a single
monetary policy, EMU has created the focus for on-going dialogue between ETUC, the
31
Commission and the ECB about the links between prices, pay, employment and
economic performance. Indeed, there already appears to be a consensus that, if lower
paying countries are to close the gap with higher paying ones without fuelling inflation,
collective bargaining has to allow for differential increases in pay in line with
improvements in productivity. Again, employers’ organisations are under pressure to
engage: to come to the ‘dialogue’, if not the bargaining, table. In addition, ETUC’s role
also serves to legitimate its aspirations to provide coherence to the bargaining coordination initiatives of the European trade union industry federations.
At Euro-company level, management driven processes of ‘institutional’ isomorphism
described earlier are increasingly operating across national borders to encourage the
transfer of practices around a menu approved by corporate headquarters. Coupled with
the adoption of European-wide management structures, the effect, if not the intention, is
to promote the use of cross-national comparisons not just by local managers but also by
trade union and employee representatives (Marginson and Sisson, 1998). The
introduction of European Work Councils (EWCs) provides institutional underpinning to
accelerate this process, for management as well as for employee representatives
(Lamers, 1998).
Whether at multi-sector, sector or Euro-company level, experience so far suggests that
the prospects for successful bargaining co-ordination on an EU basis can be enhanced
by focusing on principles, targets, guidelines or parameters to be aimed for in national
and local negotiations, rather than on specific substantive outcomes. In other words, the
conditions for effective horizontal co-ordination at the European level rest on devolution
of the particular way in which the objectives of co-ordination are operationalised and
implemented by negotiators at sector and company level in different European
countries, and therefore on the presence of vertical co-ordination. However, as noted
above, the conditions to support such vertical co-ordination — or bargaining
governability — vary widely between countries, especially at sector level. In the majority
of EU member states characterised by processes of ‘organised’ decentralisation there is
growing debate about how far enterprise-level negotiations are developing within the
framework laid down by sector and multi-sector agreements, and how far they are
stepping outside of it. For example in France, sector agreements increasingly appear to
32
be little more than reference points for substantive negotiations at company level,
whereas in Germany — growing concern over autonomous works council bargaining
notwithstanding — company-level negotiations show a stronger tendency to remain
within the parameters established in sector agreements. Where a process of
‘disorganised’ decentralisation prevails, as in the UK, vertical co-ordination on a sector
basis becomes pretty much an impossibility. This suggests that addressing the vertical
dimension of co-ordination may well prove less tractable to trade unions and employers’
organisations alike (but not to multinational companies) than articulating bargaining
objectives along the horizontal dimension at European level.
Importantly too, as Traxler (1999: 129) observes, bargaining co-ordination at national
level rarely rests on an inclusive process embracing employers’ organisations and trade
unions across all sectors. Indeed, under pattern bargaining the size of the pattern
setting group may be relatively small.
There is hardly a working national system of bargaining co-ordination which has
been able to incorporate all groups. By contrast, it is often a rather small core
group that actively contributes to the realisation of economy-wide co-ordination.
This becomes apparent when examining the size of the pattern-setting group in
those countries charcterised by enduring pattern bargaining. In Austria and
Germany, the share of the pattern setting industry in the total number of
employees was no more than 8.3 per cent (in 1996) and 16.3 per cent (in 1990)
respectively.
It follows that effective bargaining co-ordination at EU level may be built around subgroup coalitions of trade unions and/or employers organisations and multinational
companies in particular countries and/or sectors which come to be accepted as pattern
setters, a possibility pursued below.
Multi-speed co-ordination - multi-speed ‘Europeanisation’?
An important implication is that the pace at which co-ordinated bargaining develops is
likely to vary considerably both within and between sectors, and within and between
countries. Within sectors, there is a sharp asymmetry in focus on the part of trade
unions and employers (Marginson and Schulten, 1999). On the trade union side,
initiatives aimed at cross-border co-ordination are focusing on the sector level. At
33
company level, the potential offered by EWCs appears to remain largely unfulfilled.
Even union representatives in the highly organised automotive sector are tending to see
EWCs as an instrument to gain information to be deployed in their domestic
negotiations rather than co-ordinate action across countries (Hanké, 2000). Amongst
employers, the organisations responsible for sector-level negotiations are strongly
opposed to cross-border co-ordination. The management of MNCs, by contrast, is
increasingly co-ordinating bargaining over working practices and working time
arrangements across countries, bringing to bear the ‘isomorphism’ pressures discussed
earlier. The extent of the co-ordination can differ significantly from company to
company, however, depending on the nature and extent of integration, ownership,
market, geographical spread, organisation structure and the ability of employee
representatives to mount their own ‘coercive comparisons’.
Differences between sectors are inextricably bound up with industrial structure and the
source of growing differences within countries. A comparison of the automotive,
financial services and road haulage sectors will illustrate the point. In automotive
manufacturing, cross-national comparisons at company level are already an important
consideration in negotiations between management and trade unions as well as
investment decisions; in financial services, they hardly feature except in the case of
specialist groups, which tend to be non-unionised and; in road haulage, they are yet to
register even amongst the international logistics operations that are beginning to
emerge. Automobile manufacture is exceptional in the degree of homogenisation of
activities and the accompanying integration of operations for their delivery, being
dominated by a small number of very large MNCs with increasingly integrated European
and in some cases world-wide markets and production operations. An internal market
for capital has long been a feature and the use of ‘coercive comparisons’ integral to its
operation. Financial services is also increasingly dominated by large MNCs. Yet most of
these organisations are involved in an increasingly diverse range of activities embracing
both banking (retail, corporate and investment) and insurance. Moreover, there is
nothing like the cross-national branding and integration there is in automotive
manufacturing. Most importantly, retail banking, where most unionised employees are to
be found, remains largely a domestic affair, albeit increasingly influenced by global
developments. Road haulage is dominated by small and medium-sized operators,
34
although as noted above international logistics companies are emerging servicing the
transportation, distribution and warehousing requirements of multinational clients across
several European countries. Competition for loads, however, is increasingly crossborder drawing small and medium-sized hauliers from across, and beyond, the EU into
intensive cost-based competition within the single market (for further details, see Sisson
and Marginson, 2000).
Thus whilst the reference points of collective bargaining in the automotive sector are
becoming increasingly cross-border, especially in regard to working time, working
conditions and working practices, on the part of both employers and employee
representatives, those in financial services remain overwhelmingly domestic in nature.
Whereas the pattern bargaining that already exists in the automotive sector is likely to
extend beyond national boundaries to reach across Europe, in banking in particular it is
likely to remain within the confines of national borders. A further contrast comes from
road haulage, where the potential instability and undercutting of wages and conditions
likely to arise from fierce cost competition on a pan-European basis is leading some
trade union and employers’ association officials to contemplate the need for some kind
of European-level regulatory arrangement that would put a floor under wages and
conditions (see Sisson and Marginson, 2000). Here the outcome may be the
superimposition of a European-wide multi-employer agreement on top of existing multiemployer arrangements at national and district levels.
Differences between countries reflect both the extent to which the economies of subgroups of countries are already more integrated with each other than they are with those
of the EEA as a whole, and the similarity or otherwise of industrial relations structures
and traditions which, in turn, shapes the immediate potential for co-ordination initiatives.
Thus, co-operation amongst both employers’ organisations and amongst trade unions in
the Nordic countries reflects both the comparative depth of the economic integration that
already exists between these countries and important similarities in industrial relations
institutions and traditions. A similar argument applies, although a little less forcefully, to
the countries which were previously part of the unofficial ‘Deutsch-Mark zone’: Austria,
Belgium, Germany and the Netherlands (see Marginson and Schulten, 1999) and which,
as noted earlier, have been the focus of pioneering initiatives in bargaining co-ordination
35
on the part of trade unions. As a result, European co-ordination of bargaining may flow
from arrangements which embrace varying geographical configurations of European
countries.
‘Pattern bargaining’ on pay?
Our final remarks are reserved for the prospects for the EU-level co-ordination of pay
bargaining that has so exercised policy makers and economists. In theory, there are
three main possibilities in the light of the earlier discussion:
•
‘target setting’, in which national and/or sector negotiators in each country seek to
introduce an agreed formula in their separate negotiations;
•
‘pattern bargaining’, where negotiators from one company/sector/country seek to
introduce the formula and the rest try to follow;
•
‘synchronised bargaining’, where national and/or sector negotiators in each country
seek to introduce the formula in negotiations taking place more or less
simultaneously.
In practice, it is impossible to ignore the context. ‘Synchronised bargaining’ seems least
likely, as it would mean fundamental changes in the timing of negotiations in most
countries — hardly a practical proposition. ‘Target setting’, the approach favoured by the
ETUC and its industry federations, seems the most plausible. It nonetheless fails to take
into account that not all negotiations carry equivalent weight in terms of their wider
impact. Not only is Germany the largest economy in the EU, and the one with the
largest manufacturing sector, which is important for the links with international costs and
prices. The current arrangements for collective bargaining also mean that metalworking
already sets the pattern for Germany and, to a considerable extent, the Benelux and
Scandinavian countries as well. Perhaps most fundamentally, it is for these reasons that
German pay developments are likely to weigh most heavily with the ECB in fulfilling its
responsibilities (see Soskice and Iversen, 1998 for an analysis of the implications of this
and alternative scenarios).
36
In the circumstances, it is difficult to escape the conclusion that, whatever the intention,
‘pattern bargaining’ based on Germany is likely to be the outcome. The key issue is
whether it happens by default or by design. If it is by default, German considerations will
understandably predominate. If it is by design, there will at least be an opportunity to
embrace wider considerations. The problem is that it is likely to be very difficult to
achieve a consensus among trade unions, let alone employers as well. Not only would it
involve a wider group of countries recognising Germany as the ‘pattern setter’. Even
more fundamentally, it would require German negotiators being willing to embrace wider
considerations and therefore different priorities. As Fritsche et al. (1999: 82) observe, it
would give those responsible for wage policy in Germany ‘a special responsibility for all
of Europe’ similar to the role of German monetary policy in the past.
It is also likely that co-ordinated bargaining on a productivity-based formula will
encourage the further decentralisation of collective bargaining within national systems.
Clearly, if lower paying countries are to close the gap with higher paying ones without
fuelling inflation, there is little alternative to such a formula. Yet it does not necessarily
follow that employers will be willing to meet trade union demands for productivity-related
pay increases in negotiations at the sector or multi-sector levels. They may do so in
countries where the economy is expanding very rapidly and there are concerns about
pay settlements getting out of hand. Elsewhere, however, they are likely to argue that
negotiations over productivity should be devolved to the company level, for reasons
described earlier. If so, the effect will be to intensify the pressure to switch the emphasis
at sector level from standard to framework agreements and to co-ordinate the
increasingly important company bargaining.
CONCLUSION
Thinking of the wider implications of the discussion, there are four points that can be
made. The first takes us back to the starting point and the connection between industrial
relations systems and markets. The one follows the other, it seems, even when markets
become international. Contrary to most commentator’s expectations, however, it is
management, above all in the MNCs, that it is promoting ‘Europeanisation’, as much as
37
it is trade unions. Unilateral management co-ordination is directly leading to the greater
harmonisation of many of the conditions of employment and indirectly encouraging trade
unions to respond. In the absence of Traxler’s ‘strong state protagonist’ to cast the
‘shadow of the law’ over proceedings, however, co-ordinated bargaining rather than
collective bargaining is likely to be the result.
The second point is about process. It is benchmarking, promoted as a means of
facilitating organisational change and competitiveness, and target setting, aimed at
attaining similar outcomes across different national settings, which are emerging as
principal vehicles for greater ‘Europeanisation’. Indeed, at inter-governmental level, in
the form of the EU’s employment strategy, and at company level, in the form of
Dimaggio and Powell’s three types of ‘institutional isomorphism’, benchmarking could be
said to be acquiring quasi-regulatory status.
The third point is also about process. Explanation rooted in structures, be they
economic or institutional, is only likely to get us so far. If there is one thing that the
review draws attention to, it is the need for a better understanding of the negotiating
process and its implications. Especially important in the context of European integration
is to understand the choices, tactical as well as strategic, the parties make in the light of
both the horizontal and vertical dimensions of the collective action problems confronting
them.
The fourth and final point is to note an important paradox. The forces encouraging the
development of ‘one Europe’ are also creating ‘several Europes’. In our particular case,
greater cross-national convergence within companies and sectors also means greater
diversity between companies and sectors. Crucially, in the absence of a strong supranational state protagonist, prepared to enforce — through concertation or legislation —
a European-level collective bargaining system, differences in structure and institutions
are likely to lead be some markedly differentiated arrangements as between sectors.
The implications are likely to be profound for the future development of both national
and EU industrial relations systems.
38
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Box 1 Walton and McKersie’s analytical framework
Labor negotiations, as an instance of
word. In social negotiations, the goal
social negotiations, is comprised of four
conflict can relate to several values; it can
systems of activity [or subprocess], each
involve allocation of any resources, e.g.,
with its own function for the interacting
economic, power, or status symbols.
parties, its own internal logics, and its
What game theorists refer to as fixed-sum
own identifiable set of instrumental acts or
games are the situations we have in
tactics.
mind: one person's gain is a loss to the
The
first
distributive
other. The specific points at which the
bargaining; its function is to resolve pure
negotiating objectives of the two parties
conflicts
second,
come in contact define the issues.
integrative bargaining, functions to find
Formally, an issue will refer to an area of
common or complementary interests and
common concern in which the objectives
solve problems confronting both parties.
of the two parties are assumed to be in
The
conflict. As such, it is the subject of
third
subprocess
of
interest.
subprocess
is
The
is
attitudinal
structuring and its functions are to
distributive bargaining.
influence the attitudes of the participants
toward each other and to affect the basic
Integrative
bargaining
refers
to
the
bonds which relate the two parties they
system of activities which is instrumental
represent. A fourth subprocess, intra-
to the attainment of objectives which are
organisational bargaining has the function
not in fundamental conflict with those of
of achieving consensus within each of the
the other party and which therefore can
interacting groups.
be integrated to some degree. Such
objectives are said to define an area of
Distributive bargaining is a hypothetical
common concern, a problem. Integrative
construct referring to the complex system
bargaining and distributive bargaining are
of activities instrumental to the attainment
both joint decision-making processes.
of one party's goals when they are in
However, these processes are quite
basic conflict with those of the other party.
dissimilar and yet are rational responses
It is the type of activity most familiar to
to different situations. Integrative potential
students of negotiations; in fact, it is
exists when the nature of a problem
"bargaining" in the strictest sense of the
permits solutions which benefit
48
both parties, or at least when the gains of
patterns usually give content to this
one
equal
process in a way comparable to that of
sacrifices by the other. This is closely
issues and problems in distributive and
related to what game theorists call the
integrative processes. The distinction
varying-sum game.
among the processes is that whereas the
party
do
not
represent
first
two
are
joint
decision-making
Attitudinal Structuring. Distributive and
processes, attitudinal structuring is a
integrative bargaining pertain to economic
socio-emotional
issues and the rights and obligations of
designed
the parties, which are the generally
relationships.
to
interpersonal
change
process
attitudes
and
recognised content of labor negotiations.
However, we postulate that an additional
Intraorganisational Bargaining. The three
major
is
processes discussed thus far relate to the
between
reconciliation process that takes place
parties, in particular such attitudes as
between the union and the company.
friendliness-hostility, trust, respect, and
During the course of negotiations another
the
system of activities, designed to achieve
function
influencing
the
of
negotiations
relationships
motivational
orientation
of
consensus within the union and within the
competitiveness-cooperativeness.
company,
takes
place.
Intra-
Although the existing relationship pattern
organisational bargaining refers to the
is acknowledged to be influenced by
system of activities which brings the
many more enduring forces (such as the
expectations of principals into alignment
technical and economic context, the basic
with those of the chief negotiator.
personality
key
… In a sense the chief negotiator is the
participants, and the social belief systems
recipient of two sets of demands-One
which pervade the two parties), the
from across the table and one from his
negotiators can and do take advantage of
own organisation. His dilemma stems
the interaction system of negotiations to
from conflict at two levels: differing
produce attitudinal change.
aspirations about issues and differing
dispositions
of
Attitudinal structuring is our tern for the
expectations about behavior.
system of activities instrumental to the
attainment of desired relationship patterns
Source: Walton and McKersie, 1965:4-5
between the parties. Desired relationship
49