European Collective Bargaining in the Context of the Crisis: A Trifurcated Landscape

Since the onset of the crisis, collective bargaining arrangements across the EU have come under pressure from employers and the public authorities to become more ‘marketized’ (Crouch 2014), i.e. more responsive to firms’ economic and competitive circumstances. Pressure for further marketization has largely focused on the coordinated, multi-employer bargaining arrangements which have hitherto constituted a cornerstone of labour market regulation in most of western Europe. These arrangements are now being targeted by national and international public and financial authorities as standing for rigidity and impeding flexibility in the labour market. This is particularly so in those countries which have received financial rescue packages, where one thrust of the measures reforming labour markets, imposed directly or indirectly at the behest of the European institutions and IMF, has been to undermine the coordination capacity of sector, and multi-sector, collective agreements.  More widely, however, the policy prescriptions emanating from the EU’s new economic governance regime have been mainly targeted at inducing reform in countries with multi-, rather than single-, employer bargaining arrangements.

The paper draws on a range of secondary data on medium-term and recent developments to develop three main arguments. First, from the mid-1980s onwards collective bargaining arrangements have responded to ongoing employer pressure to become more sensitive to firms’ business circumstances through a process of decentralisation. As is well established, this process has exhibited two main trajectories (Traxler 1995), ‘organised’ and ‘disorganised’ decentralisation. Under the former, scope for bargaining at company level is opened up within frameworks established by multi-employer, sector or cross-sector, agreements, whereas under the latter multi-employer agreements are swept away and bargaining moves entirely to the single employer, company or establishment level. For multi-employer agreements, the effect of ‘organised’ decentralisation became corrosive of their regulatory capacity (Visser 2013), rendering the standards they set increasingly perforated. At the same time, however, the underpinnings of multi-employer bargaining largely remained in place. These included crucial state supports such as the favourability principle, extension mechanisms and protection for agreements following their expiry.  

Second, the crisis has emerged as a critical moment in the evolution of multi-employer bargaining arrangements in particular. Taking account also of those countries where single-employer bargaining predominates, the result is an increasingly trifurcated European landscape. Profound changes in multi-employer bargaining arrangements have been imposed, directly and indirectly, in those countries receiving financial rescue packages from the European institutions and IMF. Governments and/or the European authorities and IMF have intervened in a concerted push to foster market-based determination of wages and conditions through company-level bargaining, involving a frontal assault disrupting the coordination capacity of multi-employer agreements. Change has, to considerable extent, been imposed rather than negotiated between employers and trade unions.  In other countries where multi-employer arrangements predominate change has been less far-reaching and resulted from negotiation between employers’ organisations and trade unions rather than being imposed. The response has been to extend the pre-existing trajectory of ‘organised decentralisation’ even further. In some instances also national public authorities have taken steps to reinforce the regulatory capacity of multi-employer arrangements. In most of the countries where single-employer bargaining arrangements predominated prior to the crisis there has been little change, reflecting the more marketized nature of single- as compared to multi-employer bargaining arrangements. 

Third, in the period since 2008, the EU institutions, including the Commission, the Council and the ECB, have effected a ‘paradigm shift’ (Schulten and Mueller 2013) in their stance towards collective bargaining arrangements governing wage determination in particular. Previous respect for the Treaty provisions which demarcate collective bargaining over wages as a national level matter and one which is outside of the EU’s competence has been displaced by growing intervention not only over wage policy but also over the collective bargaining arrangements which determine wages. This is evidenced by the country specific recommendations (CSRs) issued, on an annual basis, under the EU’s new economic governance regime adopted in 2011 in response to the crisis (Marginson and Welz 2014). CSRs concerning wage policy and wage determination have been mainly addressed at further marketizing bargaining arrangements and targeted at countries where multi-employer bargaining arrangements predominate. In contrast, the countries where single-employer arrangements predominate have been subject to relatively few CSRs. The implication is that whilst coordinated multi-employer bargaining arrangements have long been regarded as one of the pillars of the so-called European social model, including by the Commission itself (European Commission 2009), single-employer arrangements have now become the preferred institutional benchmark amongst the European institutions.

Looking ahead, the current trifurcation of Europe’s collective bargaining landscape may prove not to be a stable feature. Disruption of the coordination capacity of multi-employer bargaining arrangements in the countries receiving financial rescue packages from the European institutions has brought with it new possibilities for employers to negotiate on a single-employer basis, or to determine wages and conditions unilaterally.  Employers in countries where multi-employer arrangements remain intact may come to covet the ability to negotiate arrangements entirely at company level now available to their counterparts in an increased number of countries. Governments in those countries where multi-employer arrangements remain intact, and which hitherto have remained supportive of them, may themselves come to embrace the European authorities’ policy mantra promoting market-based determination of wages and conditions. 

References

Crouch C (2014) ‘Introduction: Labour markets and social policy after the crisis’ Transfer 20, 1: 7-22.

European Commission (2009) Industrial Relations in Europe Report 2008 Luxembourg, Publications Office of the European Union

Marginson P and Welz C (2014) ‘Changes to wage-setting mechanisms in the context of the crisis and the EU’s new economic governance regime’ European Industrial Relations Observatory Online: http://www.eurofound.europa.eu/eiro/studies/tn1402049s/tn1402049s.htm

Schulten T and Mueller T (2013) ‘A new European interventionism?in Natali D and Vanhercke B (eds) Social Developments in the European Union 2012 Brussels: ETUI/OSE

Traxler F (1995) ‘Farewell to labour market associations?’ in Crouch C and Traxler F (eds) Organised Industrial Relations in Europe’ What Future? Aldershot: Avebury, 3-19.

Visser J (2013) ‘Wage bargaining institutions: from crisis to crisis’ DG EcoFin Economic Papers No 488, Brussels: European Commission