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By Bill

Why Is It Necessary To Have Collective Bargaining Agreements Among Unionized Organization

On 15, Apr 2021 | In Uncategorized | By Bill

As a transitional solution, opening clauses were introduced in Germany in more general agreements42, which were initially limited to working time, and then extended to wages from 1995 onset, Heinbach and Maier, 2011). At first, only the unions were able to agree on a revision of the contractual terms, but collective agreements quickly allowed “employment and competitiveness pacts” (PECs) with the works councils (with or without the formal participation of a trade union). These have spread more and more and are used independently of the specific economic situation (Seifert and Massa-Wirth, 2005[68]). Kohaut and Schnabel (2006[69]) indicate, based on data from the IAB`s business panel, that in 2005, 13% of companies and 29% of employees in Germany were covered by a collective agreement with an opening clause. About half of the companies concerned (53% in the west, 50% in the east) had used such a clause, mainly to change working hours, and only a third to change the base salary or annual bonuses. Data from the WSI Works Council survey (Schulten and Bispinck, 2014[70]) and the IAB`s business panel (Addison, 2016[71]) do not yet show any particular developments, other than a catch-up period during the crisis. In addition, national construction unions, through their commercial department with the AFL-CIO, negotiate national agreements with contractors for both construction and maintenance projects. There are currently national construction craft contracts covering 301 maintenance projects in 34 countries, involving 118 signatory employers.31 On average, income dispersion in collective bargaining is lower when compositional differences are taken into account (Figure 3.4). In the first group of countries where the three levels of bargaining coexist, wage dispersion is the largest among workers who are not subject to collective bargaining, followed by collective bargaining at the enterprise level and then by sectoral negotiations.

On the other hand, for the second group of countries where there are no sectoral negotiations, the dispersion of wages between the workers concerned and those who are not the same, at least on average. A cross-border comparison of average values for the first two groups suggests that collective bargaining at the enterprise level is only effective in reducing wage dispersion when it comes to sectoral negotiations. One possible explanation might be that, in most cases, companies that are characterized by collective bargaining at the enterprise level are also covered by sectoral negotiations. Collective bargaining at the enterprise level cannot then completely reverse the reduction of inequalities due to sectoral negotiations. In five countries (Hungary, Korea, Mexico, Norway and Portugal), the results are moving in the opposite direction. Overall, however, they appear to be identical to those in the previous section, which indicate that the distribution of wages in schemes with no sectoral or higher bargaining margin is less identical (see Chart 3.3). ← 42. And German law still allows this only if negotiators make explicit arrangements for them. Opening clauses are one of the main instruments for adapting collective bargaining systems, in which the hierarchy of agreements is governed by the principle of deepening and using extensions.

Indeed, opening clauses – and in particular temporary rigour clauses – are often referred to as “safety valves” (Visser, 2016[47]), in order to avoid “uniform” sectoral agreements, in particular to adapt to local or specific permanent conditions, or to react quickly to an unexpected shock and maintain a high level of support for large-scale collective bargaining systems41 , but if they are not regulated, they can lead to top-down competition between companies and even undermine regulatory capacity.