Partnership Under Pressure: Decentralized Bargaining in Danish and Australian Manufacturing

The decentralization of collective bargaining has been a major trend in many developed economies over recent decades. Consequently, there is a greater onus on the local parties to satisfy their respective aims as they negotiate the key terms and conditions of employment at the company or enterprise level.  These decentralized bargaining relationships can range from arms-length accommodation to mutual gains partnership, with government policy generally directed towards the latter as a means of improving workplace productivity and economic performance. Partnership can take different forms, not all of which live up to its implicit promise of mutuality. A key indicator of partnership is how the parties interact and bargain. However, the process of bargaining under partnership has been under-examined.  In particular, there is a lack of studies examining these bargaining dynamics using negotiation theory.

This article seeks to explore the factors that shape the trajectory of decentralized bargaining relationships in practice, through a comparison of local union-management negotiation processes in Australian and Danish manufacturing. Our theoretical departure point is Walton and McKersie’s work on strategic management-union negotiation. We elaborate the negotiation processes in their model by drawing on the wider negotiation literature to develop a framework for better analysing how and why negotiations unfold the way they do. We apply our framework to two case studies of bargaining in partnership contexts in two countries with different institutional settings, Denmark and Australia. In Australia, the shift to decentralized bargaining commenced in the 1980s and the bargaining process is highly regulated. . By contrast, decentralized bargaining in Denmark is more recent and is far more voluntarist.

We identify a number of negotiation factors that impact upon the reproduction of decentralized bargaining relationships at local level: goal alignment; the distribution of power between the parties; interpersonal dynamics (including trust and information exchange); negotiation structure and critical incidents. However, the voluntarist regulatory framework in Denmark appears to leave local negotiators with more scope and greater incentives to manage these elements of the negotiation process in an integrative fashion, compared  to the legalistic regulatory framework in Australia. Our findings have implications for both bargaining practice and public policy. In practical terms, the reproduction of bargaining relationships is likely to influence the viability of mutual gains bargaining and, more generally, the pursuit of union-management ‘partnerships’. At the public policy level, our findings suggest that differences between the institutional settings of national industrial relations systems may tend to push company-level bargaining towards either fragility or stability.