HPAVC/HPAVC CD-ROM.iso/pc/HOMEWORK.ZIP/COLLBARG.TXT

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Collective Bargaining:
A Great Social Invention?
Discuss.






















Niall Eddery
SS MSISS
91279089



 "There's strength in numbers"
This is a clichΘ, or could even be called a proverb that most of us have heard at some stage
in our lives. It also lies at the heart of collective bargaining, and it provides a
reasonable, although simplistic reason for the use of collective bargaining, and also gives
us an indication of where and for whom it is most useful.

Collective bargaining's origins lie in one of man's primary instincts; defence. In an
industrial relations context this is defence of proper working conditions, secure employment
and proper pay. Collective bargaining allowed this by gaining pay increases through the
increased power of the workers as a joint force. In this context I see collective bargaining
as more of an economic and political invention which has had an influence on the social
aspects of employment and living. Because of this I would have to say that collective
bargaining is not a great social invention simply because it was not a social invention. But
it does have social benefits, by providing more economic stability for those who partake in
it among other things which I will discuss in this essay. Collective bargaining also has its
disadvantages which I will also discuss. These advantages and disadvantages fall on both
sides of the collective bargaining fence; the employees and employers.

But what exactly is collective bargaining? The answer to that depends on ones viewpoint.
What are the social benefits of collective bargaining? And who do these benefits affect?
These are but a few of the questions I intend to answer in the course of the next 2000 or so
words.

To put this essay in context I must say what I feel collective bargaining is and what its
purposes are.

I see collective bargaining, in its most basic form, as the process by which an organised
group of employees, in the form of trade unions, negotiate with employers, their
representatives or their associations in relation to any aspect of employment within the
employers organisation. The reason that collective bargaining and trade unions are used is
the reason cited in the first paragraph; "There's strength in numbers". The individual
threat by a single employee to withhold labour is not very great. But when the majority of a
workforce in an organisation threaten to strike, or threaten any other form of industrial
action this threat becomes altogether more substantial. Collective bargaining gives redress
to the imbalance of power between individual workers and employers (Gunnigle et al, 1995).
This is the main purpose that collective bargaining is used in industrial relations, and
essentially gives collective bargaining a political purpose; the equalisation of power. Once
this extra power is attained, collective bargaining is then used for primarily economic
purposes. It is only in recent times that social issues have been included in the
negotiations in collective bargaining. As this process tends to lead to equal pay for all
workers doing the same work, there is as a consequence a social benefit; equality amongst
the workforce. While this can have its downside, namely complacency among the employees as
there is little incentive to do better in work, this disadvantage has been partly eroded in
recent times with the advent of productivity deals, which I will discuss in more detail
later in this essay.

Collective bargaining is also a political institution in that it regulates and defines the
interaction between trade unions and management. In a social context, the consequences of
this is a system  for regulating industrial conflict. This can help ensure that any
industrial conflict is kept within reasonable bounds, and that in most cases the more
militant elements in trade unions are kept under control by virtue of the fact that the
majority of the workforce see an alternative avenue of dealing with disputes. I believe that
this consequence of collective bargaining contradicts the optimistic Marxist view that trade
unions and collective bargaining are a school for socialism and a potential revolutionary
force. It does confirm the pessimistic view that it ensures that trade unions will never be
any more than trade unions, and that collective bargaining oils the wheels of capitalism.
But that's not a bad thing at all, and is one of the great social benefits of collective
bargaining. So how exactly does collective bargaining oil the wheels of capitalism?

Collective bargaining provides management with a method for dealing with employees in an
equitable way. But not only equitable, but also seen to be equitable. If areas of common
interest are maximised, and stressed in the collective bargaining process, this can
reinforce a an acceptance of common interest by the workforce (Purcell, 1979). The process
of collective bargaining also legitimises trade unions within the company or employing
organisation. Purcell also contends that this legitimacy can give trade union members a
sense of belonging to the organisation (1979). These three things; the sense of equality,
common interest and belonging will make workers more content, minimise conflict and create a
feeling of stability within the company. Collective bargaining, when agreements that come
from it are for set time periods, can allow management to plan for the future based on those
agreements and the knowledge that the unions are likely to cooperate. All of the above oil
the wheels of a capitalist society. And as I both live in and believe in a largely
capitalist society, this has to be a good social influence.

Collective bargaining also has its disadvantages as far as capitalism is concerned. In cases
where radicals have managed to hijack the union's side of collective bargaining then
unreasonable demands can lead to severe conflict. The same can be said of the employer side.
Inflexible and uncompromising employers can cause severe disharmony, and possibly cause
irreversible damage to the employee-employer relationship. But this will only occur in a
minority of situations. The greatest disadvantages of collective bargaining in a capitalist
society lie mainly in the financial arena. Collective bargaining in the form of wage rounds
leads to both wage and grade drift. Wage drift leads to higher wage costs for employers and
higher inflation within the economy, which in turn leads to higher interest rates and lower
investment. Lower investment means that fewer jobs are created, unemployment rises, social
welfare payments increase and possibly an increase in the national debt. Following these
consequences there would be less money in the economy overall in real terms. Grade drift is
a problem for employers which is linked to wage drift. Grade drift occurs where secure jobs
are one of the trade unions aims in collective bargaining. As jobs become more automated
with the advance of technology, employers are forced to keep staff to keep to previous
agreements. As companies no longer need as many staff the workforce tends to get older, with
rising wage costs and mainly static skill levels.

In Ireland over the last 25 years, the focus of collective bargaining has been widened to a
nation-wide one from localised and industry level, with various degrees of success. This
focus on the nation-wide picture has led to 7 national wage agreements, 2 national
understandings, and three other agreements or programmes; the Programme for National
Recovery (PNR), The Programme for Economic and Social Progress and the Programme for
Competitiveness and Work. It is my opinion that centralised collective bargaining has
evolved in much the same manner as collective bargaining itself; focusing on purely economic
issues, and then steadily including more social issues. While the national wage agreement
secured certain pay increases, the real value of those wages dropped. It was during the era
of the National Wage Agreements that  inflation rose to 20%, days lost through strikes
increased and unofficial strikes increased (Gunnigle et al, 1995). Although this may seem
that this type of collective bargaining had a bad social influence, it must be noted that
the OPEC recessions of the 1970's would have had been a contributing factor to all of the
above.

In 1987 the government, trade unions and the FUE negotiated the PNR. Other than the
provisions for pay increases, social issues were taken into consideration: 'The programme
was to cover the period up to the end of 1990 and entailed the following provisions: -The
creation of a fiscal, exchange and monetary climate conducive to economic growth. This
included a commitment that the ration of debt to GNP should be reduced to between 5 and 7
percent; -movement towards greater equity and fairness in the tax system -measures to
generate employment opportunities -Reduction of social inequalities"
    (Gunnigle et al, 1995; 191..192)
Overall the PNR proved to be a successful venture, although it was helped along by the boom
period of the late 80's. There was substantial economic growth, a reduction in the debt to
GNP ratio and a decline in strike levels (Gunnigle et al, 1995).

The PESP contained similar, but widened social commitments to the PNR. While not as entirely
successful as the PNR, the PESP had its positive social influences in the form of low
interest rates and low inflation, in spite of the recession of the early 1990's. Industrial
peace also continued throughout this period.

The PCW, like the two programmes before it, focused on social issues in increasing strength.
As this programme is still running, we can say little about its success or otherwise, other
than to say that there is still relative industrial peace, sustained economic growth and low
inflation and interest rates.

In the above discussions on the three programmes, I have only considered the more obvious
social benefits, i.e.. those which the programmes set out to achieve. There are other social
benefits which follow on from those discussed above. One of the most important of these is
confidence in the Irish economy. With industrial harmony, low interest rates, low inflation
and sustained growth comes confidence in the economy. One indicator of the fact that the
programmes inspire confidence is this: In 1987, when the PNR was being negotiated, the
Federated Union of Employers had to be coerced into the negotiations. Yet in 1993, 95% of
senior personnel managers were in favour of a further PESP style agreement. (Gunnigle et al,
1995).  The stability of the agreements has provided management with a situation where they
can be reasonably sure of what is coming and can plan ahead based on that. The programmes
have also allowed successive governments to plan ahead, something normally unheard of.
Previously, governments had tended to plan for one fiscal year in the form of the budget,
but now we have a situation where they are planning for three years with the programmes. The
programmes have also provided a sense of continuity, as successive governments from all
political parties have continued the programmes. This form of planning ahead has allowed
significant progress in the areas of debt reduction, social welfare and taxation.

It is not only in an Irish context that collective bargaining has been seen as desiring an
effect on social aspects of the economy. In the UK, where there has been little, if any
centralised collective bargaining, Fox states: "[Collective bargaining] has often been seen
as, though not by all pluralists, not only as levelling up employee power to an acceptable
approximation of that of management, but also as reinforcing government social welfare and
redistributive policies in gradually reducing class difference." (Fox, 1985:22) But it would
seem that the lack of any centralised bargaining has reduced this impact of collective
bargaining; "Collective bargaining has not substantially shifted the proportion of the
national product going to wages and lower salaries, nor have welfare and other so-called
redistributive policies had the equalising effects imputed on them" (Fox, 1985;22) In
Ireland, while there have been few dramatic changes with regard to social welfare, there
have been significant cuts in the effective tax rate in favour of the lower paid. If we take
the 1994 budget as one example, the effective tax rate for a single person earning ú120 per
week was cut by 3% from 20.6% to 17.6%. For the higher paid, if we take the example of
someone earning ú600 per week, the effective tax rate was only cut by 1.5% (McCarthy and
Tansey, 1994). While this cannot be directly attributed to the success or otherwise of
Collective bargaining, I maintain that the stabilising effect of the three agreements, along
with the commitment therein would have had a distinct influence. This reduction in taxation
will have a social influence: "to re integrate larger numbers of the unemployed back into
the labour market, it is clearly desirable that the taxation burden on earned income be
reduced" (McCarthy and Tansey, 1994;67)

Centralised collective bargaining didn't actually do away with localised collective
bargaining. Instead it changed the focus of collective bargaining. Gunnigle and Flood
contend that the focus changed from pay increases towards employment conditions, pay
anomalies and productivity. (1995). This is another of the good social influences of
collective bargaining in Ireland. Now, rather than haggling over minimal wage increases,
localised collective bargaining is instead working at improving working conditions, reducing
grievances and increasing productivity. This change in focus has led collective bargaining
away from the adversarial win-lose situation to a more cooperative model, with management
and unions working together to achieve common goals.. While management have had to pay out
more to improve working conditions and fund productivity deals, they have gained increases
in productivity, worker flexibility and industrial harmony. In the negotiation of these
'win-win' deals, one added bonus is the extension of trust. Where both parties to the
negotiation stand to gain, communications between them tend to be more open than would occur
in an adversarial situation. If agreements are made under good faith, both parties to the
negotiation may feel a moral obligation to follow the agreement. This can cause dual
loyalties in staff, that is loyalty to both the Union and the company. This can become a
problem should the good relationship between management and unions break down. (Fox 1985).

I must say that although I believe that collective bargaining's origins lie mainly in an
economic arena, had it been a social invention it would have been a good one. In an Irish
context, where the prevailing ideology and public opinion has allowed collective bargaining
to flourish, its social impact, while not as great as some would have hoped, has been for
the better. When collective bargaining addresses a range of issues which are inter-related,
and addresses the interactions between them, the benefits can be great. But when collective
bargaining focuses on one issue, without regard for its effects on other issues that the
effects can be disastrous, as seen in the case of the national wage agreements..

Collective bargaining is not however, and never will be, a revolutionary force.
As Fox wrote in 1985:
"Collective bargaining... emerges as a process through which employee collectives aspire,
not to transform their work situation, but to bend it somewhat in their favour" (Fox,
1985;153) In conclusion then, while I believe that collective bargaining has many good
social influences, it cannot hope to change society in any dramatic way.