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e-book Collective Bargaining and Wage Formation: Performance and Challenges

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When the economy improves, centralised or coordinated bargaining ensures that the benefits of a growing economy are widely shared amongst workers. When the economy worsens, such bargaining makes it easier to find adjustment through wages and working time thereby avoiding a massive wave of workers being fired throughout the economy.

Collective Bargaining Issues

The OECD also makes the link with short-time work schemes that partially compensate for lost wages, correctly pointing out that such systems often require the involvement of social partners. It is essential that the OECD, governments and other international institutions align their policies with this conclusion. It is an international trade union organisation which has consultative status with the OECD and its various committees.

The development and importance of wage boards

There is trouble ahead for the future labour market: global growth is falling, jobs are disappearing, employment contracts are changing, inequality is on the rise and the middle classes are no longer growing. Employment, education and social policies must help stop the rising inequalities and uncertainties in the labour market. We must take advantage of the opportunities that new technologies bring, while also making sure nobody become outsiders. New questions need addressing: How do you deal with new technology and new ways of working?

Should you remove the link between job security and employment? Should you make plans for a social safety net which encompasses the entire global supply chain? Raymond Torres thinks politics is now lagging behind developments in the labour market. Something needs to be done. The development is driven by mega trends like globalisations, changing technologies including digitalisation, automation and robotisation along with demographic changes, war, instability and migration. The danger signs are mounting up, but it is not entirely a black and white picture.

In future, jobs which can be done by computers, robots and artificial intelligence can disappear. A fragmented labour market is another emerging pattern. Standard employment contracts which regulate the relationship between employer and employee are no longer the standard.

Collective Bargaining and Wage Formation: Performance and Challenges

An increasing number of people are outside of the organised labour market. They are freelances and sole traders, or crowd workers who offer their services over the internet. They are the ones who are both employed by a company and work for themselves. This means the employee works when the employer needs manpower. Zero-hours contracts are on the increase in the Netherlands and in the UK. A third tendency highlighted by Torres is the rising inequality and the shrinking middle classes. Among middle-income earners the number is This is a global phenomenon. We see a tendency of shrinking middle classes.

This could lead to more youth unemployment and it can influence social stability. One reason for the development we see today, thinks Raymond Torres, is the fact that politics is not keeping pace with the technological development. Therefore politics must change and adapt to the new things that are happening. How do you achieve this change when those who should be included are outside of the established systems? Trade unions are built around employees, but fewer and fewer people are employed, especially in larger companies.

This is currently being discussed in the trade union movement. He believes a universal basic income can lead to cuts to other social benefits.


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But it is not up to him to decide, he says. Policy making at the ILO is built on collective decisions based on the tripartite system. These are not decisions employees can make. Another possibility which he envisages is to change the entire social security system to create a system where social benefit is organised as a portfolio for the individual. This could include transferable rights which individuals could carry with them regardless of being employed or freelance.


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This system could let you transfer rights between different social benefits. If you loose your job, you could spend the money on taking further education or you could postpone your retirement age in order to save money for something else. One question which has been raised about this system is whether it can include healthcare.

Collective Bargaining and Wage Formation - Performance and Challenges | Hannu Piekkola | Springer

Raymond Torres thinks that must be a collective system since the expenses and needs connected with healthcare will vary greatly from person to person, and nobody can predict who will fall ill or have an accident. Another aim for the centenary is to create international labour standards. This has been considered to be the responsibility of national politicians.


  1. When Pigs Fly.
  2. OECD finds that centralised or coordinated collective bargaining strengthens labour markets - TUAC!
  3. Micro-level evidence on wage rigidities in Finland - Munich Personal RePEc Archive.
  4. Collective Bargaining and Wage Formation: Performance and Challenges - Google Books.
  5. Now there is a debate about whether this should also be the responsibility of multinational companies, which could be responsible for health and security throughout the global supply chain, where subcontractors would also carry some responsibility. The cooperation between the social partners and the tripartite cooperation is also at the heart of the Nordic model.