31 Collective Bargaining

Rajeev Jain

1. Learning Outcome

After completing this module, you would be able to:

• Define collective bargaining
• Understand the basic characteristics of collective bargaining Know the various objectives of collective bargaining
• Understand the various advantages of collective bargaining Put a light upon various types of collective bargaining
• Learn the process of collective bargaining in detail

2.  Introduction and Definition of Collective Bargaining

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Collective bargaining is a process whereby organized labor and management negotiate the terms and the conditions of employment. Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions. Collective agreement usually set out wage scales, working hours, training, health and safety, overtime, grievances, mechanisms and rights to participate in workplace or company affairs. Ultimately the term “bargaining” implies that the process is one of haggling, which is more appropriate to one- time relationships such as a onetime purchaser or a claimant to damages.

While collective bargaining may take the form of haggling, ideally it should involve adjusting the respective positions of the parties in a way that is satisfactory to all. Collective bargaining is specifically an industrial relations mechanism or tool, and is an aspect of negotiation, applicable to employment relationship. In collective bargaining the union always has a collective interest since the negotiations are for the benefit of several employees.

Where collective bargaining is not for one employer but for several, collective interests become a feature for both parties to the bargaining process. In collective bargaining certain essential conditions need to be satisfied, such as the existence of freedom of association and a labor law system. Further, since the beneficiaries of collective bargaining are in daily contact with each other, negotiations take place in the background of a continuing relationship which ultimately motivates the parties to resolve the specific issues. We can say that Collective bargaining is a method by which trade unions protect and improve the condition of their member’s working lives. Let’s explore some definitions from different sources:

According to ILO, “Collective Bargaining is a fundamental right. The right to Collective Bargaining forms an integral part of the ILO declaration on fundamental Principles (1998).”

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OECD (Organization for Economic Co-operation and Development), WTO (World Trade Organization) and the United Nations advocates Collective Bargaining in similar tones. Collective Bargaining is a part of “Core Labor Standards, Social clause and Global Compact respectively” This means future that Collective Bargaining should be considered as a Fundamental Right.

In majority of the cases collective bargaining process deals with issues like Rate of wages, pay, Hours of employment, working conditions, Employment policies and Productivity settlement.

Today collective bargaining has assumed a complex nature, conducted in the most formal environment, associating the services of a large number of experts, legal practitioners, consultants and specialized personnel. Today it is regarded as a social process, because it occurs in a social setting.

3. Basic Characteristic and Objectives of Collective Bargaining

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A. Collective: It’s collective in two ways: 1) For collective interest workers collectively bargains 2) Management and workers jointly arrive at an amicable solution through negotiations. The Union is expected to bring out the common consensus on collective issues rather than individual issues.

B. Bargaining Power: In collective bargaining the bargaining strength of both the parties across the table is equal. Ideally it is industrial democracy at work. It will only be democratic only if both the parties are equipped with knowledge and skill. The strength of the union also depends on the demand and supply of working force. Similarly how much capital is invested upon one worker also determines the ratio of bargaining power. For example: A pilots union would have more bargaining power than the union of road transport. Because the capita land stake invested on the pilot is much higher than the drivers.

C. Representation: The Collective Bargaining process must be represented by those who have the capacity to take decisions.

D. Bipartite Process: The employees and the employers negotiate the issue directly across the table. And there is no third party intervention like pressure groups, legal consultants.

E. Flexible: Both the parties in Collective Bargaining should have to flexible mental set up for arriving amicably on a common consensus.

F. Continuous: Collective bargaining is a continuous process that includes implementation of the agreement and also further negotiations.

G. Voluntary: Both the parties come in front of each other voluntary in order to arrive at a voluntary agreement, which is mutually acceptable to both the parties.

H. Power relationship: Both parties want to extract the maximum from each other in collective bargaining. But in order to reach a common consensus they have to retreat from their positions. For this both the parties try to reach on a common ground without any serious dilution of their power.

I. Dynamic: It’s a dynamic process because it involves the following:

• Implementation process is also on going.
• Mental makeup of the parties always keeps on changing.
• A process of agreement which itself contains various concepts which may change and alter from time to time to be more effective.
• Based on the demand of the situation, various strategies used by both the parties keeps on changing

There are some basic objectives of collective bargaining on that basis whole process generally work, these are:

• Settle the conflicts related to working conditions and wages.
• To protect the interest of the workers through collective action.
• To resolve the difference between the workers and management through voluntary negotiations and to arrive at a consensus.
• To avoid third party intervention in matters relating to employment.
• Practically speaking any issues that has any relevance to management and workers becomes the subject matter of bargaining.

4.  Advantages of Collective Bargaining

Workers join unions to solve following issues through collective bargaining:

• Desire to have more influence in affective change in the work environment
• Dissatisfaction with working environment, including working conditions, compensation, and supervision
• Employee beliefs regarding the potential benefits of unions.

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Various advantages of collective bargaining are:

A. Collective bargaining is a form of participation because it involves a sharing of rule making power between rule making power between employers and unions in the areas which in earlier times were regarded as management prerogative e.g. transfer, promotion, redundancy.

B. Collective bargaining agreements often institutionalize settlement through dialogue. For instance, a collective agreement may provide for methods by which disputes between the parties will be settled. In that event parties know beforehand that if they are in disagreement there is an agreed method by which such disagreement may be resolved.

C. Collective bargaining has the advantage of settlement through dialogue and consensus rather than through conflict and confrontation. Agreement resulting from collective bargaining usually represents the choice or compromise of the parties themselves.

D. Collective bargaining agreements sometimes renounce or limit the settlement of disputes through trade union action.

E. Collective bargaining is an essential feature in the concept of social partnership towards which labor relations should strive. Social partnership in this context may be described as a partnership between organized employer institutions and organized labor institutions designed to maintain non– confrontational process in the settlement of disputes which may arise between employers and employees.

F. In societies where there is a multiplicity of unions and shifting union loyalties, collective bargaining a consequent agreements tend to stabilize union membership.

G. Collective bargaining is the most important and effective in improving industrial relations.

H. Collective bargaining has a valuable by- products relevant to the relationship between the two parties.

5.  Types of Collective Bargaining

Source: Designed by Author

In bargaining situations, demands are pitched higher than what one would really settle for and offers are initially made lower than what one is really prepare to give. On the other hand it’s a charter in which some major and some minor demands consist. All these variations in bargaining can be divided in three types, theses are:

(i) Distributive Bargaining: Distributive bargaining is the most common type of bargaining and involves zero-sum negotiation. In other words, one side wins and other side loses. Union employees may try to convince management that they will strike if they don’t get the wages or working conditions they desire. Management, in turn may be willing to try to ride the strike out, especially if they have cross-trained other workers or have external replacements to fill in for those on strike. In this bargaining, union and management have initial offers or demands, target points, resistance points and settlement ranges.

(ii) Integrative Bargaining: Integrative bargaining is similar to problem- solving sessions in which both sides are trying to reach mutually beneficial alternatives. Both the employer and union try to resolve the conflict to the benefit of both parties.

(iii) Concessionary Bargaining: It involves a union’s giving back to management some of what it has gained in previous bargaining. Why would labor be willing to give back what it worked so hard to obtain? Usually such a move is prompted by labor leader who recognize the need to assist employers in reducing operating cost in order to prevent layoffs and that motivates concessionary bargaining.

6. Process of Collective Bargaining

Harvard Law School’s Program on Negotiation describes the collective bargaining process as comprising five core phases:

Source: Designed by Author

1) Preparation and Framing. In this phase both the school board and the union examine their own situation in order to develop the issues that they believe will be most important, including assessing ‘you’re interests as well as the interests of the other side’;

2) Bargaining Over How to Bargain. Here, the parties decide the ground rules that will guide the negotiations. This is where the logistics are determined, such as the rules for secrecy and the frequency of negotiating meetings;

3) Opening and Exploring. This phase involves the initial opening statements and the possible options that exist to resolve them. In a word, this phase could be described as ‘brainstorming’;

4) Focusing and Agreeing. This stage comprises the time when ‘what ifs’ and ‘proposals’ are set forth and the drafting of agreements take place; and

5) Implementation and Administration. This stage is described as consisting of ‘effective joint implementation through shared visions, strategic planning and negotiated change.’

We can also classify the process of collective bargaining in following phase also:

    6.1 Developing a Bargaining Relationship

6.2 Preparation for Negotiation

6.3 Negotiation Stage

6.4 Collective Agreements

Source: Designed by Author

6.1 Developing a Bargaining Relationship

One of the very important facets which need to be considered before studying the process of collective bargaining is “Understanding and developing of a good Bargaining relationship”. This step consists of these activities mainly;

A. Recognition of the Bargaining Agent: In those organizations where there is a single trade union, that union is generally granted recognition to represent the workers. But where there is more than one union, any of these criteria may be used for identifying the representative union, namely:

•  Selection of the union by a secret ballot.
• Selection through verification of membership by some government agency if required.
• Bargaining with a joint committee of all major unions.
• Bargaining with a negotiation committee in which different unions would be represented in proportion to their verified membership
• Bargaining with a negotiation committee which consists of elected representative of every department of the organization selected by secret ballot, irrespective of their union affiliations.

    B. Levels of bargaining. Collective bargaining is possible at all levels, such as:

•  At the level of the enterprise,
• It may be at the level of the industry in a particular region.
• At the level of the entire industry in the country, that is, at the national level.

From the point of view of an individual establishment, enterprise-level bargaining is generally useful in the sense that the settlement is tailored to the conditions of that organization.

C. Scope and Coverage of Collective Bargaining: Though in many organizations bargaining is struck only by specific issues like wage increase, bonus, or seniority, promotion, etc., yet it is considered advantageous, both for the management and the trade unions, to cover as many issues of interests to both parties as possible. Now a days the orientation of collective bargaining is changing from conflict to cooperation and there by building an atmosphere of trust, progress and social welfare. For example: union must strive for larger scope and coverage like wages and service conditions for contract labor, temporary, part time employees, trainees etc.

D. Process Variation of Collective Bargaining: The negotiation process has been visualized in different ways. Collective bargaining procedure can be compared with the similar to an exercise in politics where the relative strength of the parties stems from decisiveness and that it resembles with a debate. They are also of the view that both the parties on the bargaining table become entirely flexible and willing to be persuaded only when all the facts have been presented.

However with the increasing maturity of collective bargaining, there has been enlargement of the rational process. In addition several other factors also influence the negotiation process. Among these factors some are mentioned below:

• Objectives of the parties.
• Kind of experience, knowledge the parties have.
• The Industrial legislation of the concerned country.
• The personalities and training of the negotiators.
• The history of the labor relations in the enterprise.
• The size of the bargaining unit and
• The economic environment.

    6.2 Preparation for Negotiation

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Prior to the actual bargaining sessions, enough care should be taken by both the parties to have a thorough preparation for the negotiations. This has become a pre – requisite to collective bargaining in view of several reasons. Consultation with the lower level members of their respective organizations can help both the parties to obtain valuable information and evolve specific bargaining table approaches. The consultation process also increases the morale of the two organizations. Again the technical assistance of legal and public relations experts can also be utilized gainfully in the collective bargaining process. Finally care should be taken to preplan with mutual consent the meeting places, ground rules relating to transcripts of the sessions , publicity releases, the payment system of union representatives and allied issues.

6.3 Negotiation Stage

Methodology for bargaining is very important in negotiating process. It will help the negotiator to develop those personal and managerial (administrative) qualities of preparedness, knowledge, ability, sensitivity, timing, analytical abilities, composure and patience. These qualities develop as a result of observation, experience involvement and conscious individual effort and experience.

As a bargaining methodology it is desirable to list all the bargaining items, whether introduced by the employer or the employee that the parties will consider during the course of the collective bargaining negotiations. These bargaining items could be separated into two parts –

• The cost or financial items
• The other for non cost or non financial items.

After listing the items priority rating can be determined for these items based on its value or importance relative to all other items on the agenda. The range of the objectives could be decided. This methodology provides a systematic framework for approaching collective bargaining negotiations. Some advantages to collective bargaining negotiations result from the use of the methodology by objectives.

6.4 Collective Agreements

Collective agreements are commonly classified under two headings –‘procedural’ and ‘substantive’.

Source: Designed by Author

(a) Procedure Agreements: Procedure agreements spell out the steps by which the industrial relations processes are carried out. Procedure agreements are collective agreements which relate to:

(1) Machinery for consultation, negotiation or arbitration on terms and conditions of employment or for any other matters which arise between trade unions and employers.

(2) Negotiating rights

(3) Facilities for trade union officials and

(4) Disciplinary matters and individual workers’ grievances.

(b) Substantive Agreements: These contain the ‘substance’ of any agreement on terms and conditions of the employment. They cover payments of all kinds, i.e. wage rates, shift allowances, incentive payments also holidays and fringe benefits such as pensions and sick pay and various other allowances.

(c) Mixed Procedural/ Substantive Agreements: The distinction between ‘procedural’ and ‘substantive’ agreements while useful, does not always apply in practice. It is possible to have both ’substantive’ and ‘procedural’ elements in the same agreement. There is, however, a tendency for procedural agreements to have a separate and long term existence and consequently they are not subject to a great deal of alteration. On the other hand, substantive agreements are altered from time to time to take account of on-going negotiations.

Notwithstanding the variations in collective bargaining process, in recent days it is characterized by rational discussions based on facts. In modern collective bargaining process the low level of behavioral patterns such as emotional outburst, tricks, distortion of facts, misrepresentations and deceit are largely avoided. The labor and management representatives have realized that these elements cause unhealthy labor relations and increase the possibility of industrial conflict. Implicitly, one of the goals of collective bargaining is to promote a rational and harmonious relationship in the organization. Accordingly, the negotiators should have qualities of patience, trustworthiness, friendliness, integrity and fairness. Each party should share the attitude of self assessment and consider that the other party may not necessarily be wrong all the time. If such an open attitude is developed in both the parties, the negotiation process is likely to become successful.

7. Summary

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Collective bargaining emerged initially has been purely Metter between the plant level union and the plant management. The negotiations either at the state or at the industry level are yet not frequent. The collective bargaining has not decentralized beyond the plant level because crafts unions are absent. There are three important reasons as to why collective bargaining has not gone beyond the plant level: a) the varying sizes not permit uniform employment conditions; b) the absence of homogeneous labor market owing to lack of uniform skills and pattern of training which does not promote free mobility of labor market owing to lack of uniform skills and pattern of training which does not promote free mobility of labor so that uniform employment conditions could be evolved for the industry as a whole. c) the plant union leadership which at present enjoys enormous powers and faces prospects of political climb is reluctant to get integrated into an industry wise union where its power are likely to be restricted.