United States: The Collective Bargaining State Of Play (AKA Risk Management For Employers)

Last Updated: June 3 2019
Article by Chris Gardner

A consistent theme in recent years for both employers and unions is that enterprise bargaining is broken.

The genesis of enterprise bargaining in the mid 1990's lay in its potential to generate productivity gains at a time when workplaces were strangled by terms and conditions set for whole industries and occupations, divorced from the particular needs of a workplace. At the time, enterprise bargaining presented opportunity. But this potential is all but exhausted.

Most negotiations are now centred on squeezing a wage outcome. Employers jump on the bargaining merry-go-around every three or four years to avoid protected industrial action. Thus the process for many employers is one of risk and its avoidance, rather than opportunity.

For unions, enterprise bargaining is not delivering sufficient wage growth. Unions also argue that the process can be easily stymied by employers who are alleged to "game" the system – meaning that they find ways to avoid bargaining or work around the spirit or intent of the bargaining laws. There's another challenge for unions. Resourcing every negotiation isn't easy. There are, after all, around 5000 agreements made each year.

The system relies on "power" based bargaining – at least in key sectors. The party with the most power prevails. Ironically, it's large employers that are vulnerable to the power of a union to disrupt the business through the power of industrial action or some other campaign. Business decision making focuses on the short term, as agreements are reached to avoid the immediate impact of industrial action (which it needs to be acknowledged can have longer term impact). However, the long-term impact of doing the deal is often under-estimated.

The higher education sector is a great example where the union has successfully secured excellent outcomes and leap-frogged them across the sector. These outcomes include highly restrictive provisions around workplace change that rival anything on, say, the waterfront.

Collective bargaining is on the wane in the private sector with rapid declines in the numbers of agreements and employees covered. A sharp decline has occurred under the watch of the Fair Work Act despite it promoting "enterprise-level collective bargaining" as one of its seven objects. The reasons for this are varied and will be the subject of a further blog.

Tomorrow we will identify our top 7 on the outlook for enterprise bargaining in Australia.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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