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Changing Collective Bargaining

Union representation is the most effective way for workers to ensure their voices are heard. It is also central to effective collective negotiation about the fundamental challenges facing our economy. The challenges of skills gaps, training and productivity are so serious and widespread that the decline of union membership and collective bargaining need to be re-examined as a lever to negotiate interventions. Because collective bargaining provides structures to negotiate and compromise between competing interests, it allows strong embedded structures of worker voice. But both union membership and coverage of collective bargaining in the UK have been in decline since the 1970s, especially in the private sector.

What has driven the decline in union membership?

In order to see a strong future, it is important to correctly diagnose the problems. Especially relevant is to recognise that without effective structures to represent the interests of one side of the bargaining relationship (workers) any negotiating mechanism loses effectiveness and legitimacy.

The decline of union membership has been driven largely by structural changes in the economy and that these have increased the organisational challenges for unions. So understanding those structural challenges is crucial to a correct diagnosis. The number of people working in large, unionised workplaces has declined as the economy has moved towards service work. Even where big manufacturing plants exist, they are more dependent on capital investment than the huge numbers of workers in the past. People are therefore much more likely to work in sectors such as retail, hospitality and catering that tend to have smaller workplaces and higher labour turnover. In short, large unionised workplaces have been replaced with smaller in-unionised ones.

We know from studies of union organising campaigns that unions can be really successful at recruiting, organising and representing workers in these kinds of smaller workplaces when they target them. The structural challenge is that the level of resource required to target this vast number of workplaces is beyond the scope of any union movement. It is expensive to recruit and train good workplace union representatives and it is risky in a context where labour turnover is high.

How do other countries manage the decline in union membership?

Other countries have different regulatory contexts and international studies show that they help speed or slow the decline of both union membership and collective bargaining. Systems that reinforce bargaining tend to start from an explicit acknowledgement that it is unfeasible for unions to organise and represent workers in lots of small companies and workplaces. So an agreement secured for a lead employer can be extended to cover workers in other organisations. The mechanisms for doing that vary. Typically, they give employers some flexibility in how they apply the terms. A common approach is the use of ‘framework agreements’ where a deal might be negotiated for a sector setting a band within which wage increases can be agreed. Well-organised and successful companies may agree a wage rise at the top of the band, while workers in an un-unionised or struggling company may only secure an increase at the bottom of the band.

This kind of arrangement requires very significant changes to the policy context. Collective representation for both workers and employers needs to be structurally embedded in national and organisational practices, including: rights to union representation, often alongside other mechanisms for worker voice (e.g. works councils); involvement of unions and employer associations at sectoral and workplace levels; rights to collective bargaining and the right to take collective action; extension mechanisms, and enforcement mechanisms that require parties to adhere to agreements. Very little of this infrastructure exists in the UK system of worker representation which gives private sector employers very little reason or incentive to negotiate.

How extension mechanisms can help

Of all of these, extension mechanisms are one of the most important because they have the potential to address the structural challenges highlighted. They allow unions to bargain basic terms and conditions even where they do not have membership strength developing a system that could regulate terms and conditions in sectors where small employers and poor employment practices currently thrive.

That opens space to negotiate other issues of mutual interest such as skills gaps, training requirements, and productivity. Because agreements can cover any issue, sectoral negotiation can help develop good work practices and mechanisms to enforce them in employers who might otherwise fail to do so. By putting cross-cutting sectoral issues at the heart of negotiations, sectoral collective bargaining can help address the productivity challenges facing the UK economy. It is, of course, not a universal solution. The two parties need to work together in good faith, and trade-offs can be an uncomfortable compromise to achieve progress on wider issues. But with support from the public policy context to enforce agreements, the benefits are clear and there is potential to be one of the most effective ways of negotiating long-term solutions to address the very serious challenges facing the UK economy and labour force.

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