Organised Versus Disorganised Decentralisation Of Collective Bargaining: Explain The Difference And Bring Some Empirical Evidence


In the past two decades, an anomaly has appeared in Europe. A significant growth is observed in interest in contrasting employment relations. This is due to global pressure to maximize productivity, competitiveness, and rates of employment along with captivating the foreign skilled employees and the foreign investors. International companies, trade unions, governments, multinational organizations and even workers themselves gather qualified statistics at an unparalleled scale (Poole, 2013). However, these contrasts are usually de-contextualized, with underlying emphasis to identify ‘best practices’ and contrast unprocessed indicators, but very less emphasis is on complex relationships of employment. A reason behind de-contextualization is that industrial relations have turned out to be less preferred during previous two decades (Kelly, 2012). This essay is about critical analysis of employment relations and collective bargaining in European countries. In this essay, workers representation within workplaces in European countries has been analysed as well. In the end, the contribution of industrial relations on productivity and stability of employees is crucially evaluated.

Main Body

It is expected by the theorists of globalization that world will become borderless and flat. This would subvert national associations and national states, however, not certainly producing political forms at supranational level. On the other hand, continuity and even expansion of national diversity is stressed by various other researchers. Among them, a theory called ‘Varieties of Capitalism’ has turned out to be influential, specifically with its quite clear contrast between foundations of ‘coordinated market economies’ and those of ‘liberal market economies’. It has turned out to be more complex for its application to European progressions; given that majority of European Union nations are comparatively ‘mixed’ cases. The political aspects of employment relations are neglected by theory of ‘Varieties of Capitalism’ (Batt, Holman and Holtgrewe, 2009). 

The stress of strategic based research at organizational level on Employee Relation is shown in Edwards (2009) where the close connection between business strategies and Human Resource Management (HRM) is an important theme. Sources which tend to give much preference to the act of state take it as component of organization’s external context, comparative to an essential aspect in Employee Relation system. The expansion in the power of management themselves were a depiction of alteration in policies of state, at least partially. The unsupervised policies in United States applied by successive managements subverts the obligation to collaborated bargaining initially relied on New Deal governance of mid-1930, caused ‘representation disparity’. In United Kingdom, legislative bodies introduced New Labour legislation after 1997 policies of industrial relation. In Germany, composition of code termination at organizational level and industry wide collaborative bargaining is reinforced by government (Kersley et al., 2013). In Poland, the shape of Employee Relation system is determined by strategy of state to privatise. Effects of national level state is strengthened in Europe by the role of European Union, where social partnership is sponsored by government. In Asian countries, state prolongs to materialize importantly in Employee Relations in the recent times. The actions of state were underlying to alteration in the capacity of organizational level management to take initiatives of Employee Relation. The technical choices of Human Resource directors and senior managers were therefore not the certain result of conditions of competitive market; however, they were impacted by political relations. In Germany, Italy and United Kingdom the growth has been quite slower and much greater in Spain and France. An exceptional case is Poland: foreign investment was almost zero in 1990. There are three ways to affect national industrial relations. First way is by directly, indirectly, as corporations that propagate particular employee practices. Second way is by implicit or explicit risks to leave the countries. Third way is through persuading national debates on the ways to attract Foreign Direct Investment (Kalleberg, 2009).

In direct employment practices terms, these ways are most perceptible in Poland because of foreign debt role in the recent economic changeover. In service sector, the role is specifically clear like in the areas of telecommunications, banking and retail. As a whole, positive expectations in multinationals establishing high social benchmarks have been derailed largely. Even employers of Germany cannot regenerate social aspects of what is known as ‘German Model’, which involves indirect employee contribution and associational collaborative bargaining (Aspinwall and Greenwood, 2013). Over an extended period of time, foreign workers have impacted local actors in what comes out to be a hegemonic rise. While, union-free multinational organization have been aimed by union arrangement trials, however most of the times it happens in conciliatory way. According to Schalk et al. (2010), in few of the cases like Danone and Auchan, non-union representation had been experienced by foreign investors. Two captivating examples of the European Union influence upon employment relations that are offered during last one and a half decade. The first example is known as ‘soft policy’ of employment strategy of European Union, inaugurated in 1997, which got promoted highly in middle of 2000. The second one is recent need of constitutional reforms from nations requiring financial assistance (Schalk et al, 2010).

In Figure 1, two different dimensions related to employee relations are illustrated. The figure shows that union strength and corporatism in UK is moderate, whereas it is low in France, Poland, Spain, and in rest of EU. In contrary to this, union strength is high and corporatism is also high in Sweden, Italy and Germany.

An intensive debate is done relative to rules of industrial conflict on European labour market. In some countries, the desire is changing them and reducing the scope of trade unions for industrial actions, whereas some countries have a desire of keeping rules rough like today. There is a need of achieving a balance on labour market where there is some difference on the basis of industrial conflict. From some previous years, changes have been experienced by European countries regarding industrial conflict. In the Netherlands, strike is considered to be legal in case when conflict arises due to pay or conditions of employment and maximum efforts have been done by parties for negotiating with each other but they got no benefit. In addition to this, political strikes through which companies can be affected are considered to be legal; even the government is basically targeted. In case when there is valid collective contract, a strike is considered to be breach of contract and illegal. There is no right available to parties through which collective agreement is signed for taking industrial action till the applicability of agreement. (Cingano et al, 2010). According to principles, there is no permission given to parties for taking secondary actions, since basic conflict between employer and employee does not get affected. In Netherlands, in such kind of conflict disinterest, employer is considered to be wrong. There is also illegality involved in strikes and industrial actions if they result in providing any damage to third parties. Usually, parties are not provided with permission of doing boycotts and showing any industrial conflicts through harmful actions. In case of imminent strike, mediators can be used by parties as mediators. As an alternative, conflict can be banned through approaching a court. Court has a right of ruling proportionally. In Netherlands, most of strikers are seldom and strikes last for about three working days. There is no right to strikers for paying or gaining unemployment advantage, but trade unions compensate them in question. In case there is a direct interest by non-strikers in a conflict, like if strike is for rising pays of employees, then they have no entitlement of paying, even though they are not present in strike. In case an employee does not carry out his or her job duties due to having presence in strike, then employer has the right of locking out employees (Kruppe, Rogowskiand and Schömann, 2013).

In contrary to Netherlands, there are no particular laws related to strike in Germany. The strikers have to follow rules and legislations formed by labour market of Germany as a consequence of ruling judgements made by courts of Germany many years before. In Germany, peace is highly emphasized by labour regulation authorities. In case of force of long agreements, there is a forbiddance of taking industrial actions. Industrial actions are only permitted in case of showing exhausted behaviour by parties after taking all necessary steps of negotiation. There is a restriction on secondary actions. The reason behind this is that in Germany the aim of strike shall be arriving at new agreement of collective bargaining. With respect to the background, it is not appropriate, as risk has to be drawn into conflicts by employers who have no interest, which usually happens in case of secondary actions. There are chances of losing pay by employees who do not significantly take part in secondary actions (Eichhorst and Marx, 2011). Various kinds of delay mechanisms can be used. First of all, there is no permission of striking till the end of agreement and in case of having peace obligation. After the end of agreement, still according to legislations, there is a need of considering peace obligation. For example, in Germany’s area of metal workers, the period is of four weeks. In this time period, a new agreement must be reached by parties and in case of having negotiations, strikes must be avoided. When a break down in negotiation is experienced, then parties have to follow a process of mediation, the main aim of which is to search for mid base between positions of parties and preventing a breaking out of conflict. According to the rule, a commission is appointed by consulting with parties. In this commission, parties and two independent chair persons are included. In case of not reaching to a collective agreement by commission or due to rejection of both parties, this process of mediation comes to an end and after this point conflict might be started. In Germany, there are still chances of having mediations even after initialization of conflict (Williams, 2013).

In addition to industrial conflict in employee relations, another important concept is decentralization of collective bargaining. In almost all European countries, decentralization of collective bargaining is witnessed in last three to four decades. In these countries, a lot of variation is experienced due to which trend of decentralization was unfolded (Countouris, 2013). In some of European countries, integrated bargaining is maintained, that has been described by Emery and Thorsrud (2013) as organized decentralization. There is a strong link between pressure of decentralization and lack of integration and coordination between employers and employees within various stages of bargaining unit. In European countries, a prior trend is towards decentralization of collective bargaining whether it is organized or disorganized.

Collective bargaining is a process that involves negotiation between independent unions and companies for determining terms and conditions of job, specifically related to wages, working hours and relationship between parties. The result of collective bargaining is an integrated agreement between parties that is signed by both parties after important negotiations. With the help of this, labour safety to workers and sustainability to employers is afforded and it also helps in providing kind of regulation to public authorities that is identified by social partners. Decentralization of collective bargaining is a widely accepted trend in European countries from last few decades. There are mainly two kinds of decentralizations in collective bargaining. One is organized decentralization and other is disorganized decentralization (Heyes, 2013). According to Madsen et al (2013) in organized decentralization, there is no high involvement of unions and coverage of integrated agreements between parties. In contrary to this, disorganized decentralization is linked with a process in which there is an involvement of elimination of unions and coverage of integrated agreements. In general terms, decentralization is related to decisions, power or responsibility that is being transferred from central level to local stages.

In Great Britain, the market model is Anglo-Saxon, through which significant aspects are differentiated from Nordic and Continental models. This country has taken significant steps in reforming labour market. From most of researches, it has been found that there are some important issues like formation of wage rather than system of bargaining. In Great Britain, decentralized collective bargaining is done at three various stages, industry level, organizational level and workplace level. There was less detail involved in agreements done at industry level in era of post war, because in those agreements only minimum wages, basic rules of employment and time of working were included. In organizations of Great Britain, those agreements were supplemented at local level of workplace (Hassel, 2014).

In addition to collective bargaining, European countries differ in the kind of workers' representation diffused within workplaces. The representation of workers in workplace of countries is highly influenced by practices of industrial relations in those countries. Industrial relations is defined as sources through which accommodation of different interests included in market of labor can be done, basically for the aim to regulate relationships of employment. It involves relationship between workers and employers out of or within workplace (Bechter, Brandl and Meardi, 2012). The representation of workers within workplace is affected by industry relations. It includes processes used for expressing these relationships like collective bargaining, involvement of workers in decision making and settlement of dispute. The government and regulatory bodies of countries affect the relationships and processes. Organizations of Europe give high importance to issue of workers representation. They highly focus on formulating strategies for promoting involvement of employees. The government of European countries is involved in developing legislative arrangements for promoting the involvement of employees. Recently, a shift from direct participation is experienced by European countries towards indirect participation. Usually due to global competition the explanation of this shift is done in a significant way. In European countries the employee involvement issue and new forms of organization are considered to be an important step towards enhanced quality of manufacturing and working life as mentioned by European Commission. In organization the need for direct participation has become an innovative conventional wisdom (Holman, 2013).

While taking the contingency approach and following the empirical work done on objectives and influences, it is assumed that both of the financial and direct participation are significant for the organizations that suffer from the dynamic environments, that need to accomplish one variety and quality. In organic structures, there is a reflection of such environment with higher dependency on task and needed flexibility because of large number of services and products. Scarcity on labour markets also increases the usage of the policies for committing workers to the organization and towards the goals of organization. This holds particularly for the professionals in service industries (Jackson and Deeg, 2012). In the legislative arrangements, there is development in the representation of employee, and it is abundant in the higher workplace and at the places where a role is played by unions. It is not that much in the small and young developing organizations. Along with it, financial participation policies are there in young developing organizations and they are not particularly applied for those workers who have labour terms surrounded by labour agreements, these were identified to be applied for commercial personnel and higher qualified professionals, these were identified as lesser in organizations having unionism and it was observed as remuneration tool for management and staff, these were not present in the independent family organizations but they are growing in public organizations which are among the stock markets (Millán et al., 2013).

Relative to the effect of legal and institutional index the different interest levels are depicted by the European countries. They represent various legislative programmes, related to direct participation, final participation and employee participation. The Work Council laws in the Netherlands and structures of the Federal Republic of Germany can be contrasted through voluntary systems in the UK, Ireland and Italy. The setups made on the financial participation in France and UK can be contrasted well with the provisions and governmental laws in Spain, Sweden and Denmark. To implement the profit sharing system in France, it is compulsory for organizations having more than 50 employees (Noon, Blyton and Morrell, 2013).

According to findings of Vander Elst, De Witte and De Cuyper (2014), the effectiveness of systems and policies made for better flow of information, interpretation and consensus building, is crucial for the proper management of organizations and for acquiring competitiveness.  In addition to this, there is a crucial role of industrial relations systems on productivity, stability and equality in workplaces. With the help of industrial relations, organizations can increase productivity of employees by motivating them. Similarly, this also helps in retaining employees for longer period of time. As such, some of the basic tools for effective enterprise labour links are inseparable from few tools for management of an organization in global environment today. These factors like growth have affected the ways of encouraging employees and have affected the hierarchy of companies. They are decreasing management layers therefore supporting the conversation. Now-a-days management is defined as an activity rather than badge of class or status in the organization, and this change gives a broader potential basis. The current trend in human resource management and labour relations is to put more stress on harmonious employers and employee involvement, employee mechanisms and relation and on the exercises which do their promotion. The pressure on the organizations to be flexible is the main consequence of intense competition and globalization. Organizations have acquired this in two manners (Kulin and Svallfors, 2013).

Firstly, through technology and with the help of broader skills for increasing capacity to adapt to changes in market and then through introducing some of the employee involvement policies with an aspect for enhancing labour-management organization at the floor level, compulsory for acquiring process and product innovation. Acquiring flexibility is not based on the absence of unions. Company flexibility “based on the trust between management and labour. It means that employees are interested in foregoing the attempts to enforce individual action or through combined action work procedures that fix the work allocation, workloads and transfer of jobs. Organizational flexibility is also defined as workers who are interested in disclosing the knowledge for increasing capacity of organization and labour productivity for innovation (Poole, 2013). Manufacturers in Germany and Japan were prospering as compared to the ones in France and Britain in acquiring the flexibility. The other two countries after World War 11 did the consultation of labour management. Many companies have changed themselves for promotion of their trust. In both of the techniques including the use of innovation promotion and use of technology, employees tend to be the most crucial factor. The need for the flexibility of organization and its human resource applications and industrial links has greater influence on the structuring of organization. It affects the way in which authority in the organization is practiced (with the help of consultation and information sharing, transfer of responsibilities to cooperative procedures and employees like team work) (Dachsand Peters, 2014).


It can be concluded from above analysis that trend of employment relations has increased to great extent in European countries. There are different perspectives of different European countries towards industrial conflicts. The approach towards conflict and industrial relation is different in every country and regulations are different as well. The industrial relations also have an impact on productivity, stability and equality in workplaces. There was total control on social issues in the past, comparatively to direct communication between employees and employers, by ‘displacing’ them through maximized public capital and afterwards private capital. The present financial crisis, which subvert the policies’ sustainability are depended upon private and public capital. 




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