Overview of Industrial Relations and
Collective Bargaining in the UK

Most union membership now involves public sector employees whose paymasters are government and "the people". In the private sector of the economy the bargaining power of TUs has been reduced due to

• job losses and the effects of recession on business
• major industrial restructuring (shake-outs of major traditionally unionised industries - heavy engineering, mining, shipbuilding etc - where full-time male, employment dominated)
• government strategies to deregulate the labour market and constrain union freedom to act in ways which ignore commercial and contractual rights and obligations.
• The Thatcher government's encouragement of
  • home ownership
  • easy access to credit by all (the ubiquitous credit card)
  • the growth of service industries which offer more employment opportunities to women and part-timers

  .... have been influential in promoting individual orientations to work over collective orientations. However with the 1998 return of a Labour government, new policies may seek to redress an imbalance of power (employer over worker and TU).

• governments since the mid 1960s have legislated a range of employee rights which offer basic protections to workers (unfair dismissal, discrimination in employment, redundancy payments etc). Individuals without necessarily needing the support of a union official can seek redress before industrial tribunals if they have a complaint arising from employment - their own solicitor can represent them.
• Employers too have pursued employment strategies which emphasise individual rewards and team approaches rather than collective employer-employee relationships conducted through TU officials.

So what is the role of trade unions in the late 1990s?

• they aim to protect members and other workers from the civil dangers arising from harsh, exploitative areas of employment. Clearly, unions defend and seek to advance the regulation of ethical standards in employment and our range of civil liberties associated with work
• Are unions necessary to constrain managerial behaviour? Questions do arise as the ethics of trade union behaviour - past, current and future - which seek to constrain business practice and managerial behaviour.

• What is ethical about

  • strike action?
  • a closed shop?
  • unions having undue influence over political processes in a democratic state?
  • a union protecting members whose work performance is poor and whose employers are struggling to compete in very difficult world markets?
  • resisting changes in working methods that bring improved efficiencies albeit that jobs may change and be lost?

Trade Union Purposes

Trade unions

• bring workers together in association and represent their interests to employers, to government and to other unions
• provide support services - legal, advisory, financial, health - to members
• Their presence mediates an unequal power balance. The employer generally holds the whip hand over the individual employee whose rights stem from their contract and the general (moral) duty of employers to treat employees reasonably with respect as people who so it happens are working for them.

The trade union aim, as a collective coalition of interests, is through representative and concerted action.....

to secure fair and proper treatment for individuals and groups of workers.

Individual employees are on the weaker side of the contractual relationship when it comes to challenging arbitary and often harsh management behaviour, unilateral managerial decisions. Consideration of collective bargaining highlights the nature of unitarism and pluralism operating in the world of employment

Regulating the Wage-Work Bargain.

• individuals in the market place agreeing their terms and conditions of employment with employers
• the law (statute and civil) and its mechanisms and agencies
• the processes and institutions of collective bargaining.

Voluntary Collective Bargaining and Pluralism

Union Recognition and Managerial Prerogative

• DTI - FAIRNESS AT WORK
• A Statutory Procedure for Trade Union Recognition

When an employer agrees to do so, the employer recognises the rights of

• its employees to be members of a TU.
• it agrees to meet (give access to management) and treat with the representatives of its unionised employees. This implies a right to challenge (appeal against) management decisions and have these given serious consideration. Management agrees a willingness and thus a constraint on its scope to act. It agrees to communicate, consult, re-evaluate options and hold back on the timing of decisions.

  The prerogative of making and implementing decisions is not given up but recognition is

  recognition of a right to listen and respond

  - with a consitutional proviso namely: NOT taking precipitate action before communication and consultation processes are complete.

  Recognition normally includes reaching agreement on

  • Procedural matters
    Recognition and negotiating machinery and procedures may be agreed (procedural). In a sense these are (conflict reduction mechanisms). They anticipate that a potential for conflict (plurality of interest) exists. The provide means through which which disputed issues can be resolved - shop stewards rights, grievance and dispute handling, job severence, dismissal, consultation etc.

  • Substantive matters
    The meat in the sandwich..... not just talk but PAY and CONDITIONS. These may cross a narrow or wide range including pay and hours, shifts and premiums, holidays and even pensions.... that the employer is prepared or is not prepared to negotiate over. Thus a trade union can bargain with the employer for increases in rates of pay.

  The Collective Agreement - Binding in Honour only

  The outcome of negotiation processes will be a collective agreement which may be comprehensive i.e inclusive of all agreements about procedures and substance on i.e pay, hours, bonuses, holidays and other terms and conditions.

  The agreement takes the form of a promise "binding in honour only" between the employer and the union. Alan Fox (Beyond Contract) suggests that the agreement is a "best we can get" position arrived at by union representatives. He argues that the strength of the agreement - as a contract - is based only on

  • the level of trust that exists between the employer and the union. Distrust however is likely to remain the norm in this pluralistic, trading situation.
  • Union officers and members may just accept that the agreement is the best deal they can get for the moment.
  • They have pushed the employer as far as the employer will go and to push harder may result in loss of earnings and jobs (no point in striking etc. any more).
  • Such a conclusion reflects personal expediency rather than fundamental trust in the employer's position and long term acceptance of the agreement reached - working truce has been reached which permits continued working.
  • It does not necessarily represent a deep commitment to the employer or the commercial line that the company is taking.
    • What if the employer wishes to modify the agreement before the end of its term?
    • What if union members take action without following the procedures?

  The Trade and Bargaining Power/Leverage

  Collective bargaining is like horse trading in a marketplace. The process and outcome of a trade is determined by the extent of
  • information exchange
  • mutual trust or caution
  • the power that the parties can bring to bear - the bargaining leverage.

  If the TU has little bargaining power because members are worried about company competitiveness and job losses in a strike or if they are otherwise disinclined to be obstructive - then - union negotiators may have few cards to play. They may blow hot air and managers may be suckered by this - but......(see the Prisoner's dilemma)

  Public Opinion

  Unions and employers both seek to influence public opinion. In a dispute situation, union speakers justify their case and present their facts e.g. on television. For both employers and employees we should note and be aware of their language and the significant phrasing of descriptions which may be unemotional. They may equally seek to expose or embarass an employer's position. The public sector employer may be castigated for exploitation and insensitive attitudes towards workers. The employer may be blamed for the strike action being taken.

  "The responsibility is with management. They have not made a serious response to our wage claim. Our families are going hungry!"

  The employer may seek to give their side of the case. Generally the strategy will be to try not to exacerbate heightened emotions by making rash statements that may upset their own staff!!!!

  Workers may be demonstrating and their unin seeking to put pressure on the employer because employees have been sacked (the donw-sizing employer). However where workers have not been locked out of their jobs we need to note that

  • they choose to strike. The fact of being on strike - means they do not receive a pay packet at the end of the day - a major dilemma of choice as lack of a pay packet means they go into debt fairly quickly
  • would anyone like to do a calculation on the number of weeks that would have to be worked to make up 6 weeks loss of pay when after the strike only a further half of one percent has been secured on average earnings of £270 per week?
  • the state picks up a bill for protecting their familiies

  Distributive, Integrative and Intra-organisational Bargaining

  Walton and McKersie (1960s) chapter of book on collective bargaining by Prof: Bill McCarthy (ed) published by Penguin) offered a classification of types of bargaining which is very relevant to an understanding of the struggle between conflict and consensus in bargaining arenas. They highlighted
  • Distributive bargaining
  • Integrative bargaining
  • Intra-organisational bargaining

  Unions, labour monopoly and altruism

  Free market capitalists see unions as labour monopolies - coalitions operating to serve member interests (self-interest). Where all workers in a firm or industry are members - there is real strength in numbers. Indeed such clubs may run counter to the interests of other groups of workers - unionised or non-unionised. A strong union in one industry may pursue actions which run counter to the public interest e.g. high wage claims for their sector may lead to reduced rewards opportunities for workers elsewhere. Unions compete for members and do not necessarity cooperate with each other.

  In the spirit of the labour movement - socialism, equity and brotherhood - some altruism - concern for the needs of others - is evident. Nevertheless a national stoppage may damage the economy, other companies and other workers. The public may be substantially affected. When teachers, rail workers, electricity staff and cemetary workers etc strike - members of the wider public may find necessary services unavailable.

  Public exploitation of public sector workers

  Some workers in public service jobs may argue that the very fact of government being the paymaster means that it
  • wants to keep down public expenditure and therefore costs of public services
  • government also uses public sector pay restraintto guide pay bargaining behaviour in other sectors.

  But what is the evidence for a claim for exploitation. Low pay may reflect the "market rate" for unskilled or semi-skilled work or that there is no shortage of applicants for publcic sector-type work. The problem is in determining what the market rate is for a particular job. Our judgement on public sector pay is affected by

  • a desire not to see taxes souring
  • yet we are subject to tales of woe and hardship endured by - nurses, fire service workers, refuse collectors, social workers, teachers, local government administrators.

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  Exercise

  Investigate and chart the wage determination and setting machinery that government/society offers to public sector workers to ensure that their rewards are fair and equitable in comparative terms with other worker groups.

  How is such fairness decided when governments are intent on keeping public expenditure to a minimum?

  What is the problem of making up for years of lost ground?

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  Clearly political decisions cut across wages which ordinarily would be set by forces in a free labour market. In this regard we should be reminded that Mackie points to self-interest, cooperation, competition and conflict in exchange relationships.

  No longer a Closed Shop

  In the labour market, the Thatcher government in the 1990s took action to render the "closed shop" unlawful. This was an act to deregulate specific labour market control of worker associations themselves whereby a worker had to either be a member of the union before being accepted for a job (pre-entry closed shop) or, join the union on taking up emplopyment (post-entry closed shop).

  Employment legislation in the 1990s sought to clarify individual rights to be a union member and join in "approved" activities of TUs. This however would be a matter of individual choice. The worker was not to be forced into doing so. This served Convervative government policy well in loosening up the UK labour market and reducing the influence of TUs and union membership over particular sectors of employment opportunity.

  Contrast this anti-monopoly argument with the fact that employers may covertly recruit non-unionists and can still dismiss employees for reasons of poor performance or for reasons of redundancy - even though victimisation pre and post employment for being or not being a member of a TU is not permitted at law.

  Unionism, income distribution and self-interest in a market

  TUs provide members with
  • a collective voice over terms and conditions of employment
  • the need for "controllable", safe working arrangements and
  • protection against arbitary employer decisions.

  These institutions which enable individual and groups of member workers to press for a "fair allocation" in the distribution of income that arises from production. This distribution is an employer distribution or squeezed out of employers in a market bargain.

  The owner employs workers to produce/generate income from facilities funded by the owners investment. Employees are a cost to the business. Unless they are shareholders they do not receive dividends. A profit related bonus is an additional cost that an employer is willing to bear because he/she feels that employee performance and motivation are intimately linked with incentive rewards.

  The union as monopolist view holds that unions rachet up members' wages beyond what non-union workers in the same industry can do. How ? By control over working practices and using bargaining weapons such as withdrawal of labour.

  How do self-interested actions account for public interest? In a strike situation,

  • economic efficiency suffers
  • customers lose out (train to work, cannot bury the dead, electricity cut off)
  • Workers in supplier firms suffer
  • If employing companies fail then jobs are lost.

  But if a stoppage or work to rule is an event in a free market in which the invisible had (A. Smith) works - then why seek to have insitutional intervention into what is essentially trading behaviour in a marketplace?

  Just what really is the public interest and who defines it? We need to be far more specific and not just accept tabloid, assertion. Unionists in defence would argue that when they strike or put on the pressure, they are acting for their members AND indeed defending public interests (other workers, pensioners, the consumer) against employer monopoly and vested interest. Their strike action reflects civil liberties in a democratic society.

  Unions and Democratic Traditions

  Advocates of "labour market deregulation" frequently reference alleged undemocratic decision-making within unions. Politically motivated activists are seen as driving through strike action without full member support. Such argument does an injustice to the common sense of union members albeit that a show of hands in a car park is too crude a mechanism behaviourally for on-lookers to belived that all points of view have been communicated and discussed in a calm and considered fashion. But it is crass to say that union members follow the urges of union activists like sheep.

  Yet the Thatcher administration legislated to discourage precipiate strike action and to require secret ballots when such action was contemplated.

  Was this justified and why?

  Unions as a Lobby Group

  Unions are a lobby group for influencing government policy over matters affecting their members (so too are business institutions such as the Institute of Directors).

  It is said that in the 1970s union action even brought down first the Heath government (1973) and then the Callaghan adminstration (1979). This is hyperbole, for, as far as bringing governments down, the electorate makes up its mind up about the issues.

  We must not forget also that businesses are possibly even cleverer in lobbying government and funding political parties. As many individual members of parliament align themselves to the business community as to the "labour movement". Of course this is a dynamic situation as a election swingometers show. Businesses set prices to maximise profits and as Adam Smith points put will take advantage of any monopoly situation or business-to-business collaboration that will increase margins.

  We might argue that

  • traditional trade union defensive and aggressive behaviours in a market place are forms of regulation which constrain a free enterprise culture.
  • but employer-union bargaining over wages is voluntary. Successful bargaining may prompt or indeed support employers in seeking job reductions.

  So talk of maximising is far to simple. Within a union many internal decisions mediate conflicting objectives long-term job security for members versus higher wages in the short term.

  Allan Fox - expediency and truth telling (see Mackie on lies and truth telling)

  Wage rises and cost savings

  Union pressure for higher wages levels without commensurate productivity gains result in a higher cost of production from wages. Firms may cut staff. Companies may pass the wage cost increases onto the public in terms of higher prices. They may argue this point across the bargaining table with the union. Yet they will beforced to do this also if the market prices of other factors of production go up e.g. raw materials or capital interest rates go up to. So why the emotion about excessive wage demands? What other issues are raised?

  If managers obtain better utilisation of plant and equipment and new methods to reduce the average unit labour cost - the cost savings are not necessarity passed onto the public in terms of lower prices. Similarly if labour productivity improvements are achieved - prices may not fall and an approriate part of the savings achieved are not necessarily passed onto the workers whose improved performance has enabled the savings.

  For a union to organise an entire industry is likely to reduce output and business flexibility. Yet there are sectors where the scale economies and investment/cost structures of firms result in barriers to entry. Unions organising in firms with low production costs have room to bargain wages up without necessarily undermining the firm. But there are qualifications to be made on both sides of the argument.

  A Sea Change?

  A change seems to have occured in collective, institutional industrial relations in the 1980s amd 1990s. Power shifted from unions following the 1980s recession, high levels of unemployment and Thatcher government legislation on union activity.

  Wages councils were abolished in 1993.

  Union membership has declined from 13 million (early 80s) 8 million (mid 90s). Union penetration of industries has also declined. With unemployment rates falling to 6 or 7% (albeit that the way unemployment statistics are calculated has been changed), union stabilisation rather than growth is evident. There is stability in union membership in public service industries - not unusual given the constrains on public sector funding.

  Fewer members means reduced union revenues. What is right or wrong about these events? To argue there are moral implications seems to be stretching a point.

  Of course reduced union influence may offer release for managers to behave unilaterally and from narrow commercial, self-interested perspectives.

  We can point to the tension for ethical conduct in contracting parties behaving in opportunistic, self-interested ways towards each other in comparison to mutual advantage and reciprocity. The employer-union relationship is a particular case of agency which has the inherent potential for conflict of interest and claim rights. Consider the value judgments and recriminations possible from each side

  • accusations of employee shirking, absenteeism, pilfering
  • the Taylorist expectation that employees aree obliged do a "fair day's work for a fair day's pay"
  • the employer may be negligent in their express and implied obligations under contract to employees e.g.
    • unfair dismissal
    • low pay
    • unhealth and unsafety working environemnts and practices
    • employee pension fund misuse.

  • Meeting contractual and state requirements includes obligations on management to ensure equitable, non-discriminatory employment practices. The obligations are specific to legislation - sex, race, disability. They are not general extending to other "non job-related characteristics". Of course a union, with leverage can intervene to mediate unsavoury behaviour - to bring a better balance to employer-employee inequality.
  • Better information e.g. comparative wage rates can be given to members and negotiator support given for contracts
  • unions can monitor possible deviations in delivery of the contract by the employer

  A Collective Voice

  A union "voice" is arguably relevant in large firms where contact between employees and management is superficial. As actors in such a large institutional setting, if employees have problems arising from their jobs, they can either leave or speak up.

  Resigning one's job penalises the employee and lets the employer off the hook. The bad employer continues with bad behaviour. A free labour market, competitive but reflecting civic virtue, may benefit from unions restraining such unrequited employer self-interest. But the law of unfair dismissal also provides protection for individuals.

  A "citizens' republic model" values the individual being able to air problems and resolve complaints without victimisation. An aggrieved party seeks to improve their situation within an existing relationship.

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  Exercise

  Who else but a union can mobilise some leverage (pressure - direct or indirect) against a rogue employer and offer a collective voice and support for continuity in employment with safeguards against employer retaliation?

  Answer = government - through the law relating to employment

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  From the perspective of collective voice and mutual reciprocity (integrative bargaining), union membership and services have potential to contribute to productivity (increase in the general commonwealth and equity in distribution of rewards). Unions mediate for some workers - but not all - and may obtain better pay and conditions. Management is kept on its toes vis a vis employees. It is argued that

  • unions contribute to better communication channels between management and staff
  • the morale and performance of staff is improved by the fact of their union membership?
  • There is little or no evidence that union membership improves retention of loyal, experienced staff enabling the organisation to place more reliance on them for flexible, quality work.

  However employers striving for excellence and quality - may also develop and inilaterally introduce &uqot;upper-quartile" reward policies which are better than those fought over by trade unions.

  Employer Perceptions

  Do employers really see benefits in having unions as agents for their staff? Would this be true altruism or heavily a self-referential i.e. pragmatic (there is no alternative - see Alan Fox and pluralism) ?

  Do employers welcome an external monitor (the TU) of company behaviour towards staff?

  If unionisation of staff is inevitable, it is simpler to work with a single agent in contract transactions - hence employer interest in the sole bargaining agent. A problem arises however if the union is perceived to be too closely allied to the company - the company union. Such agencies risk compromising their independence.

  Non-unionism?

  Are employees in the non-union private sector at a disadvantage compared with unionised private sector counterparts? Do non-union employees in the UK:
  • receive less information from management with fewer communication channels?
  • work in poorer health and safety regimes unionised counterparts?
  • do non-union private sector workplace experience
    • higher accident and injury rates?
    • more unfair dismissals?
    • fewer grievance and disciplinary procedures?
    • more compulsory redundancies?
    • higher levels of labour turnover?

  The HRM aim in non-union workplaces is for the climate of employee relations to be good. In terms of rewards we are likely to find that private sector non-union companies have

  • wider rewards dispersions and more incidences of low pay.
  • performance related pay schemes and pay determined more flexibly by market forces than in unionised sector.s
  • more short contract "periphery" workers

  Non-unionism offers employers more flexibiity in their employee relations strategies which may translate also into higher wages and improved working conditions. Thus, is more regulation needed to constrain possible exploitation of non-union employees? How will the answer to this question be determined?

  New HRM?

  Where there is a clear field for manages to emphasise quality, competitiveness and marketplace adaptation, unions become challenged. Neo-HRM policies of fast moving, information, customer and service oriented organisations are more in evidence than anti-union policies. The HRM rhetoric is to empower the individual e.g. via Investors in People and team performance orientations and generally union leverage to constrain unitary management action is absent. However adherence to employment law is still a requirement.

  Consider:

  • Service-sector Shift
  • Derecognition of unions
  • Individual, personalised contracts over collective arrangements.
  • HRM and Unitary Framework
  • The Contradictions of HRM
  • European Directive emphasis on Institutionalised, collective representation
  • HRM as a Means to an End

  Employee Representation

  TU opposition, bargaining and lobbying constrains managers towards ethical behaviour. But is further institutionalising of TU capacity to influence corporate decision-making e.g. by worker directors or works councils, really necessary?

  Many HRM texts thematically call for "worker participation" through TU inclusive schemes inclusive but are benefits clear or is the down-side of bureaucratisation a problem (unnecessary interference in natural market processes) ? Should government "should" intervene more to promote e.g. worker-representative/TU presence on Boards?

  Consider the following

  • The HRM "participation through the job itself" model".
  • Board level participation
  • Worker directors on supervisory boards and problems of this model
  • European Worker Councils - co-determination below Board Level
  • Employee share ownership plans