Collective Bargaining, Inter‐Sectoral Heterogeneity and Competitiveness: A Cross‐National Comparison of Macroeconomic Performance

Abstract

Research on the performance effects of bargaining remains inconclusive. One reason for this is neglect of heterogeneity of the bargainers, namely differences in exposure to world markets and their implications for international competitiveness. Since the effects of bargaining on competitiveness depend on coping with productivity differentials between the exposed and sheltered sector, we discuss how distinct bargaining structures interact with these differentials. Exposed-sector pattern setting is predicted to be the only bargaining structure that is sensitive to productivity differentials. The findings from time series cross-sectional analysis corroborate the expected impact on labour costs and the current balance, whereas no employment effects are discernible.

What happened to collective bargaining during the great recession?

“…It is defined as the integration or synchronization of pay policies of distinct bargaining units (Soskice 1990;Traxler and Brandl 2012) or "the degree to which minor players deliberately follow along with what major players decide" (Kenworthy 2001:75). While full centralisation and full coordination amount to the same (Soskice 1990), fully decentralised bargaining, at the level of companies, might be highly coordinated, for instance if all negotiations are conducted by the same union, or employers take advice from one major association before signing agreements.…”

“…Stabilizing wages reduces uncertainty about future costs and prices and can thus contribute to raising business and human capital investment decisions, which depend strongly on expectations. Collective bargaining, when sufficiently inclusive and coordinated, offers a mechanism for responsible wage setting, with outcomes that are compatible with price stability and low unemployment (Aidt and Tzannatos 2008;Flanagan 1999;OECD 2006;Traxler and Brandl 2012). Moreover, collective bargaining relieves the state from the complex task of setting standards and solving coordination problems in an area marred with conflicts and risks of non-compliance.…”

Real and perceived losses from unemployment: a cross-country study

“…This can be seen in a general sense, where Blanchard and Wolfers (2000) argue that using institutions as an explanation of high unemployment when these institutions were also present when unemployment was low is problematic, whereas Nickell et al (2005), in contrast, argue that changes in OECD unemployment over time can be attributed to shifts in institutions. In the more specific case of the collective bargaining literature stemming from the seminal work by Calmfors and Driffill (1988), several papers note (Aidt and Tzannatos, 2008;Traxler and Brandl, 2012) that the literature strongly disagrees about which bargaining structure performs best. Therefore, the complicated arguments concerning the direct effect institutions may have on unemployment is a debate that is beyond the scope of this article and which for reasons of focus and clarity we have sought to avoid.…”

Rising Powers and Economic Crisis in the Euro Area

“…While the EA's CMEs all have wage-setting institutions that contain wage and ULC developments in the exposed and sheltered sectors, there are important institutional differences in terms of how the adoption of wage restraint is coordinated among trade unions in these sectors Traxler and Brandl 2012 ). Austria and Germany have 'pattern bargaining' regimes, in which trade unions and employer organizations in the export sectors-most frequently the metalworking sectors-establish wage settlements that serve as the upper limit for subsequent wage agreements in all the other sectors of the wider economy.…”