The decline in the bargaining power of labour has been a contributory factor to the fall in living standards.
John Earls is research section head at Unite the union
Speaking at last week’s annual TUC & IDS Pay Forum, I posed the question: is it time for a collective bargaining renaissance?
The decline in living standards and real wages and the increase in wage inequality have been well documented. But the share of national income that goes in wages has also shrunk to 54 per cent from a mid-1970s peak of 65 per cent. Workers – or the vast majority of them – are getting a smaller share of the economic pie.
What has been going on in parallel to these trends is that collective bargaining coverage – the proportion of workers who have their pay and conditions negotiated collectively by trade unions – has also declined.
Now, correlation doesn’t mean causation. But a number of analysts – and not all the usual suspects – have identified that the decline in the bargaining power of labour has at least been a contributory factor.
Collective bargaining coverage in the UK has fallen to below 30 per cent (with sharp differences between the public and private sectors) from about 70 per cent in 1980. Yet there is no inevitability about what has happened in the UK. Other countries (e.g. Denmark, Sweden, Finland) have retained and increased coverage at levels of around 80 per cent.
Furthermore, as Ed Sweeney (the former chair of ACAS), Tony Burke (assistant general secretary of Unite) and Alastair Hatchett (former Head of Pay and Research at IDS) told the conference, whilst there is no dispute that there has been a decline in collective bargaining, the picture may not be quite as bleak as is often portrayed and significant national agreements still exist in the private sector.
That’s not to say that there aren’t some serious challenges.
So what might be done to defend, extend and revitalise collective bargaining?
Firstly, recognise the contribution that collective bargaining makes to fairness, efficiency and stability
This is ultimately about redressing the bargaining power of labour. Let me give you a quote:
“…where you have…no parity of bargaining, the good employer is undercut by the bad and the bad by the worst…where these conditions prevail you have not a condition of progress, but a condition of progressive degeneration.”
Not Len McCluskey, but Winston Churchill, when he introduced the Agricultural Wages Board a hundred years ago. The AWB was the last surviving Wages Council and was abolished last year by the Coalition Government.
Secondly, whilst making sure that policies and institutions are relevant for the future, we must also learn from the past
John Monks, former general secretary of the TUC, has written about the development of collective bargaining in Britain and the establishment of Wages Boards and Joint Industrial Councils of union and employer representatives. These were not without their challenges – including for and from trade unions – but he asks whether we can emulate the achievement of our predecessors in the 1920s and 30s?
After all, part of the drive then was recognition that there needed to be countervailing pressures against greedy and unscrupulous employers in the aftermath of a prolonged recession. Sounds familiar, doesn’t it?
Thirdly, a collective bargaining renaissance will require political commitment
Not likely under this administration; although, not necessarily anathema to a certain type of one-nation Conservatism. But where does it feature in Ed Miliband’s ‘one nation’ Labour? Miliband has spoken about ‘predistribution‘, that is those mechanisms that can distribute rewards before government re-distributes them through taxes and transfers. For Unite, this means strong labour market institutions such as trade unions and collective bargaining.
Fourthly, whilst not sufficient on their own, institutions and structures matter
Some have called for the establishment of a new Ministry of Labour to give working people a voice in government and to counteract the voice of powerful corporate interests.
One of its duties could be to promote collective bargaining. ACAS used to have a duty to promote collective bargaining. This should be restored. Can the concept of Joint Industrial Councils and national sector bargaining be rebuilt for the 21stcentury? Fair wages resolutions should be re-introduced in public procurement establishing a wage floor on the basis of the relevant collective agreements.
Finally, it should be remembered that increased collective bargaining does not automatically translate to increased trade union membership. Unions still need to organise
But it does present opportunities for union influence, relevance and recruitment.
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