Current trends in collective
bargaining and pay determination
Alastair Hatchett
Visiting Fellow: University of Greenwich
Changing contours of collective
bargaining
• Long-term decline or resilience?
• IDS experience of monitoring collective pay
agreements over 45 years
• The decline of industry bargaining (2-tier)
• The rise of large multi-site national companies
• Sector differences & the size of companies
• Trade union density: sector, skills & gender
Resilience of private sector collective
pay bargaining
Areas where strong
car manufacture
aerospace & defence
electricity, gas & oil
banking & insurance
refineries & chemicals
rail, bus, haulage
telecoms
newspapers
Areas where weak
small construction
small retail (+ M&S, JL)
hotels, fast food etc
small manufacturers
info/communications
printing
Chemical industry employers (CIA) say that of their 150
member companies 85% are unionised (October 2013)
Reasons for strengths and weakness
Strengths derive from negotiating the rate for
the job for particular skills and qualifications –
skilled engineers, electricians, radiographers,
teachers, nurses, midwives, scientific officers.
Require stable employment and larger
workplaces.
Weaknesses arise from low-paid, unstable
employment, high staff turnover, low-skilled
work. Small workplaces. Fear of bosses.
Examples of large companies with
collective agreements setting pay
• Jaguar Land Rover, Ford, Honda, Nissan,
Toyota, Vauxhall, Rolls-Royce Motors
• Tesco, Morrisons, Asda, Retail Co-ops
• RBS, HSBC, Lloyds Banking Group, Santander
• British Gas, EDF, E.ON, RWE, Ineos
• Rolls-Royce Aerospace, BAE Systems
• British Airways, Virgin Atlantic, Heathrow
• FT, Guardian, BBC, Daily Telegraph,
Impact of recession and austerity
• In recession, unions key to negotiating short-time
+ temp pay changes (eg JLR & Honda)
• In the crisis, banks forced to merge: all
harmonised terms and maintained collective
agreements; few had pay freezes!
• Post recession some larger firms matched RPI
• Pay freezes more in non-union areas?
• Government pay policy has weakened collective
pay arrangements in the public sector
Challenging perceptions of union
representation and influence on pay
• Received wisdom: no unions in private sector
• WERS 2004: 65% of workplaces with 500+
employees set some pay via collective bargaining
• BIS 2013 on TU density shows 49% in utilities,
40% in transport, 18% in manufacturing, 17% in
finance, 14% in construction
• A problem with WERS is it is a survey of small
organisations (89% of workplaces below 50
employees in WERS 2011)
WERS findings: changes in collective
bargaining coverage 2004 to 2011
Employees covered by collective bargaining
Public sector Private sector All
2004
69%
17%
29%
2011
44%
16%
23%
Workplaces 100% collective bargaining
2004
50%
5%
11%
2011
39%
3%
8%
National pay in large companies
• Previous WERS research: long-term shift in
pay setting from industry > company > plant
• But picture more complex: piece-work
coexisted with industry bargaining in 1960s
• National pay bargaining exists today in large
companies (banks, supermarkets, BT, JLR)
• Industry barg today: NAECI, Electrical JIB, LPC
• Harmonisation: Lloyds Banking + Santander
Public sector pay determination
undermined by Government pay policy
• WERS survey in 2011captured frozen pay +
bargaining frozen or limited
• Treasury undermines ‘independence’ of PRBs
• PRBs = evidence-based collective bargaining?
• In 2011/12 NHS employers engaged in talks
on progression with NHS trade unions
• Highly unionised: eg female/professionals
• The future: fragmentation vs collectivism ?
WERS misunderstands interaction of
employers, unions and PRBs
‘A fall in the % of public sector workplaces using
multi-employers bargaining – from 58% in 2004
to 44% in 2011 – lies behind the decline in
public sector pay bargaining. The % of public
sector employees covered by collective
bargaining in Health has fallen from 74% in 2004
to 14% in 2011, in part because the PRB has
resumed responsibility of pay after AfC
negotiations were completed.’
Is the Pay Review Body process similar
to collective bargaining?
• WERS says ‘it is arguable’ that it is similar, but
they conclude that it is not (but ambiguous)
• For the purposes of assessing employment
relations it should be seen as similar
• After all, WERS 2011 finds ‘96% of public
sector employees worked in a workplace with
at least one union recognised for pay
bargaining’
• What about schools, the STRB and PRP?
Case studies from the recent past
• JLR: from short-time in 2009 to export success
in 2011-2013
• Lindsey oil refinery dispute: employers and
unions uphold NAECI agreement
• Electrical contracting: national agreement
upheld in face of employer challenge
• Tanker drivers: from fragmentation to
collective action
The role of large firms in setting
market pay levels
• IDS research on benchmarking shows large
companies in each industrial sector have wide
spread influence
• Smaller firms want to check their pay rates for
key skills against those of market leaders
• Market-based pay very important in the last
decade
• Union influence on pay therefore wider than just
where unions are recognised for pay setting