Recommendations
on employment
problems in Tunisia

2.1 MULTI-EMPLOYER BARGAINING

Guideline for employment problems / RESOLVING: 2.1 Multi-employer bargaining

Most plausible interventions

During the orientation process of the available literature, we identified the following interventions as most plausible in disputes on unfair employment benefits in the service sector:

“Multi-employer bargaining is a process whereby a group of employers join forces to create a single unit or association for the purpose of bargaining collectively with a union or group of unions [informal trade-unions]” ^[1]. It is seen as a mechanism to promote inclusive coverage of the benefits provided by collective bargaining agreements. Multi-employer bargaining can exist at different levels (workplace, industry, region or national) which can pave the way for standards peculiar to the workplace or industry. In the Philippines for example, multi-employer bargaining is proposed as a strategy to increase collective bargaining agreements coverage to workers in non-standard forms of employment ^[2].

The theoretical advantages of multi-employer bargaining have mostly to do with the implications of this structural form for the balance of bargaining power between the parties and thus, with the outcomes of bargaining. Multi-employer bargaining is often advocated as an effective response to widespread union organisation, because it discourages whipsawing and through economies of scale, facilitates the use of more sophisticated labour relations staff and support services ^[3].

The literature on decentralised bargaining has no consensus of the definition or the measurement of decentralisation, which makes the concept very elastic. However, and more generally, decentralisation means that decisions, authority or power transfers from central to local levels. Applied to wage setting, this means that the very process in which the salaries and other contract terms are negotiated moves downwards. This movement is the essence of decentralisation.

Decentralisation could occur according to a professional dimension when different unions for different professions all bargain independently at the same company or workplace. There is also a rarely discussed dimension namely the regional. Bargaining then occurs at the regional level across sectors or within industries depending on the country. Decentralisation to local or even individual level does not necessarily mean that wage formation takes place without collective bargaining. Employers and employees may still make a collective agreement that provides for the basic conditions of employment at national or industry level ^[4].

Within these agreements trade unions and employers can then agree that wage formation will take place locally and how to do it. Arrangements for the decentralised bargaining can vary substantially, not least in terms of influence for local organisations. In some cases, wage negotiations take place at several levels, first at industry level and then at the enterprise level and possibly also in individual bargaining ^[5].

It is interesting to compare multi-employer bargaining as a form of centralised bargaining with decentralised bargaining. As both constitute a different dimension of collective bargaining, it is not necessarily that they resolve unfair employment benefit disputes to the same degree and efficiency.

PICO question

For parties to an unfair employment benefits dispute in the service sector, is multi-employer bargaining or decentralised bargaining more effective for well-being?

Search strategy

The databases used are: ILO, the global deal, JSTOR, ResearchGate, Online Library.

For this PICO question, keywords used in the search strategy are: decentralised bargaining, dispute resolution, un-standard employment, multi-employer bargaining.

Assessment and grading of evidence

The main sources of evidence used for this particular subject are:

Minawa Ebisui, Non-standard workers: good practices of social dialogue and collective bargaining, International Labour Office, 2012.
Kurt Wetzel, Charles Maxey et Daniel G. Gallagher, « Management and union assessments of multi-employer bargaining in health care: a Canadian example », Journal of Health and Human Resources Administration, vol. 7, no. 4, 1985.
Charles M. Rehmus, « Multiemployer Bargaining », Current History, vol. 49, no. 288, 1965.
Joyce Anne S. Lumactud, Strengthening Multi-employer Bargaining: Policies and Practices (Phase II), ILS Discussion Paper series, 2019.
Anthony B. Sanders, « Multiemployer bargaining and monopoly: labour-management collusion and partial solution », West Virginia Law Review, vol. 113, no. 2, 2011, art. 5.
Shane Godfrey, Multi-employer collective bargaining in South Africa, Conditions of Work and Employment Series, no. 97, ILO, 2018.
Antti Kauhanen, Terhi Maczulskij et Krista Riukula, Heterogeneous Impacts of the Decentralization of Collective Bargaining, IZA Discussion Paper Series, no. 13867, 2020.
Jesus Ferreiro, « Decentralized versus Centralized Collective Bargaining: Is the Collective Bargaining Structure in Spain Efficient? », Journal of Post Keynesian Economics, vol. 26, no. 4, 2004.
Nils Karlson et Henrik Lindberg, The Decentralization of Wage Bargaining: Four Cases, Ratio Working Paper, no. 178.
Emmanuel R. Aiyede, « Decentralizing public sector collective bargaining and the contradictions of federal practice in Nigeria », Development Policy Center, 2002.

In his article, Charles M. Rehmus demonstrates briefly the advantages and disadvantages of multi-employer bargaining and why it is the most preferred form of bargaining for employers and employees in resolving employment disputes.

Joyce Anne S. Lumactud through conducting comparative analysis with countries that have implemented multi-employer bargaining. She suggested a series of policy and program interventions to strengthen inclusive coverage of collective bargaining agreements through multi-employer bargaining in the Philippines.

Minawa Ebisui provides in her study a comparative synthesis analysis of a series of national studies on nonstandard work, collective bargaining and social dialogue in selected countries. She identified a variety of approaches and strategies where collective bargaining can be improved and strengthened to cover un-standard workers with the bargaining agreements.

Shane Godfrey in his working paper provides an analytical study on how multi-employer collective bargaining in South Africa is taking place.

Anthony B. Sanders in his article explores the status of a unionised employer who competes in an industry where multiemployer bargaining prevails. He discusses the multi-employer bargaining’s anticompetitive effects and how antitrust law is an ineffective tool to remedy union-association cartel behaviour.

Antti Kauhanen, Terhi Maczulskij and IZA Krista Riukula in their discussion paper analyses the heterogeneous effects of the decentralisation of collective bargaining on the incidence of wage increases and wage dispersion in Finland. They are pioneers regarding their research where they demonstrated how decentralised bargaining leads to very different outcomes for blue- and white-collar employees.

Jesus Ferreiro tested in his case study on Spain whether the coverage and decentralised bargaining structure in Spain are efficient and valid as a determinant factor of the rates of unemployment and inflation.

Nils Karlson and Henrik Lindberg contributed to the discussion about the possible trends and processes towards decentralisation of wage bargaining within the OECD countries since the 1970s. The research is based on a data set of 16 OECD countries from 1950 to 2000, they concluded that in terms of bargaining level the trend is clear towards decentralisation since the 1970s. They demonstrated how the processes of decentralisation of wage bargaining look very differently in each country and it may occur in a context of cooperation between the labour-market organisations or in a setting of conflicts.

Quality of evidence and research gap

According to our research method, we grade the evidence comparing multi-employer bargaining and collective bargaining as moderate. The sources used to compare are medium-sized or large empirical studies. But a risk of true effects reported being different in other countries. Moreover, some authors are biassed in their opinion, and they prefer an intervention over others. This is resulting in downgrading of the evidence by one level.

A significant research gap is noticeable in containing unfair employment benefits in the service sector. Very limited evidence is available focusing on decentralised bargaining. Most literature focuses on interventions that are based on centralised bargaining to resolve the unfair employment benefits dispute.

Recommendation

Desirable outcomes

Multi-employer bargaining	Decentralised bargaining
Bringing together a large number of employers greatly facilitates the bargaining process, both labour and management agree that it would be an almost impossible task to have each employer conduct separate negotiations. Neither unions nor management have adequate skilled manpower for such a process. Moreover, the individual small employer, by joining with others, is able to hire professional and expert labour relations counsel which he might otherwise be unable to afford. Each firm thus gains and accepts the leadership of persons more professionally equipped to deal with the complex issues posed by contemporary labour relations ^[6].	Decentralisation means that collectively bargained wages may better reflect firm-and individual-specific characteristics, which may increase wage dispersion. Decentralisation may also lead to smaller wage increases for occupations for which demand is declining, such as routine occupations. However, it has been argued that the impact of decentralisation on wage dispersion is likely to depend on the preferences and bargaining power of the parties involved ^[13].
Removal of labour cost competition, it is obvious that if all employers in an industry bargain jointly they will all end up with roughly identical labour costs, thereby eliminating the possibility that any single employer will gain a competitive advantage through a lower wage rate. For example, employers in industries such as building contracting can bid on work outside their immediate home area, confident that their labour costs will be the same as all contractors bidding on the job. Multi-employer bargaining precludes the possibility of wage cuts by single employers and makes it less likely that one employer will set a low prevailing wage standard in an area ^[7].	Decentralised bargaining provides the opportunity for local union leaders, as well as workers at many sites, to participate in shop floor and strategic business decisions. Workers who have benefited from some of the more flexible work schedules that have been negotiated prefer decentralised bargaining. Local unions may agree to decentralise simply as part of a package of concessions in return for keeping their own plant in business ^[14].
Under multi-employer bargaining, differences in the employment conditions in individual firms are ironed out, and differences in working conditions among firms are subjected to more definite tests. Wage structures and other terms of employment are consolidated, and interfirm differentials are permitted only where they have a rational basis ^[8].
The standardisation of working conditions and wages in an industry result in a more stable relationship between labour and management, in a number of instances, employer acceptance of unionism is not really achieved until employers’ close ranks to deal with their employees’ representatives. In doing so, they acknowledge the union’s status as the workers’ spokesman and recognize a permanent bargaining relationship. At the same time, the union becomes more secure and responsible in its bargaining relationship, confident that it is unlikely to be unseated by a rival union group ^[9].
Multi-employer bargaining tends to reduce the total number of strikes that occur in a given industry, both because of increased professionalisation of bargaining relationships and because both parties fear the increasingly serious losses that will be entailed if all employees or all companies in an industry or area stop work ^[10].
Multi-employer bargaining can be inclusive and extended, a key feature of most multiemployer bargaining arrangements is that the agreements reached will be extended to non-parties, to employers and employees who are not members of the organisations that negotiated the agreement. (to the industry or to workers in non-standard forms of employment for example) ^[11].
Multi-employer bargaining, especially when concluded at a national or industry level, creates standards specific to the industry. Such standards, when included as collective bargaining agreements provisions, agreed and signed by the parties, and registered at the department of labour and employment, could pave the way for legislation. Since the agreement is binding between the parties, they are mandated to comply ^[12].

Undesirable outcomes

Multi-employer bargaining	Decentralised bargaining
Some critics argue that settlements tend to occur at the level acceptable to the weakest management consortium member. Further, issues important to individual institutions may be ignored or traded away by central negotiators. Line managers at the department level and local union officers may have little meaningful participation in the bargaining process ^[15].	Decentralisation of bargaining does not cover all workers, it could lead to a decline in collective bargaining coverage and has tended to benefit and favour those with bargaining power, while offering little to those who are poorly organised. Moreover, for those whose association with a single workplace is weak, negotiations at workplace level do not often offer favourable and convenient outcomes. Also, some categories of non-standard workers are excluded either in practice or due to their limited attachment to single workplaces ^[21]. In the Republic of Korea, for example, bargaining takes place predominantly at enterprise level, and enterprise unions negotiate on behalf of their members who are largely regular workers. In face of a dramatic increase in the number of non-standard workers, there has been a momentum, albeit very limited in its effect, for promoting strengthened sectoral organisation with a view to boosting solidarity among workers by restructuring and centralising the trade union movement from predominantly enterprise level to sectoral level ^[22].
Once both parties have consented to multiemployer bargaining, either may desire to withdraw from bargaining on that basis ^[16]. An employer attempting an untimely withdrawal creates numerous problems. For instance, the withdrawing employer will, no doubt, refuse to be bound by any agreement reached between the multiemployer unit and the union subsequent to its departure. More importantly, such a withdrawal could have a detrimental effect on the entire collective bargaining process ^[17].	The effects of decentralisation may differ, because the preferences and bargaining power of the parties differ in different settings. For example, white-collar unions in Finland have more positive views of decentralisation, and they are ready to accept higher levels of wage than blue-collar unions ^[24].
In multiemployer bargaining, the negotiations are apt to be conducted by high-level professionals, relatively unfamiliar with day-to-day problems in the plants. Negotiators cannot be thoroughly familiar with conditions and circumstances involving any one employer or group of employees; instead, they must bargain from a general knowledge of average conditions. Local interests are often necessarily subordinated to the dictates of national union policy or the needs and desires of a majority of the employers. Moreover, where collective bargaining agreements are not negotiated at the plant level, they may not be understood by the people who will have to live with them. There may be lessened inducement to try to make the contract work, and this may generate additional internal-plant strife ^[18].
Multi-employer bargaining in the long run can lead to a loss of democracy, as it concentrates more and more power and authority in the hands of union leaders and eliminates real membership autonomy at the local level. Decisions about working conditions, strikes and other fundamental matters tend to be removed from the people most directly concerned, to the derogation of democracy within unions ^[19].
While multiemployer bargaining may tend to reduce the total number of strikes, when strikes do occur, they will inevitably be larger in scope, with a consequently increased adverse impact upon the community. Industries in which a strike against one employer might not be serious, except to the local community involved, now become affected with a public interest. Nationwide shutdowns in industries such as steel, coal, railroading and shipping become possible and a serious threat to the public interest ^[20].

Balance of Outcomes

Multi-employer bargaining in resolving unfair employment benefits disputes has proven to be desirable, provided that the intervention by decentralised bargaining is effective. The chances of the intervention being effective are higher if the bargaining is centralised and conducted on industry or higher level where the bargaining agreement covers all employers including non-parties employees.

On the other hand, although decentralised bargaining can contribute to equal wages and treatment, it is only practised on a firm level where employees are poorly organised and thus their power is dispersed.

The desirable outcomes of multi-employer bargaining outweigh those of decentralised bargaining, and the undesirable outcomes of multi-employer bargaining outweigh those of decentralised bargaining.

The balance of outcomes is towards conducting multi-employer bargaining. Therefore, multi-employer bargaining is preferred.

Recommendation

Taking into account the balance of outcomes, the benefits for parties to an unfair employment benefits dispute, and the quality and consistency of the evidence, we make the following recommendation: for parties to an unfair employment benefits dispute, multi-employer bargaining is more conducive to well-being than decentralised bargaining.

View References

^[1] Richard A. Block, Multiemployer Bargaining and Withdrawing from the Association After Bargaining Has Begun: 38 Years of “Unusual Circumstances” Under Retail Associates, Hofstra Labor & Employment Law Journal, vol. 13, no. 2, 1996, p. 519.

^[2] Joyce Anne S. Lumactud, Strengthening Multi-employer Bargaining: Policies and Practices (Phase II), ILS Discussion Paper series, 2019, p. 2.

^[3] Kurt Wetzel, Charles Maxey et Daniel G. Gallagher, « Management and union assessments of multi-employer bargaining in health care: a Canadian example », Journal of Health and Human Resources Administration, vol. 7, no. 4, 1985, p. 446.

^[4] Nils Karlson et Henrik Lindberg, The Decentralization of Wage Bargaining: Four Cases, Ratio Working Paper, no. 178, p. 4.

^[5] Ibid., p. 5.

^[6] Charles M. Rehmus, « Multiemployer Bargaining », Current History, vol. 49, no. 288, 1965, p. 94.

^[7] Ibid., p. 94.

^[8] Ibid., p. 94.

^[9] Ibid., p. 94.

^[10] Ibid., p. 95.

^[11] Shane Godfrey, Multi-employer collective bargaining in South Africa, Conditions of Work and Employment Series, no. 97, ILO, 2018, p. 1.

^[12] Joyce Anne S. Lumactud, op. cit., p. 5.

^[13] Antti Kauhanen, Terhi Maczulskij et Krista Riukula, Heterogeneous Impacts of the Decentralization of Collective Bargaining, IZA Discussion Paper Series, no. 13867, 2020, p. 2.

^[14] Emmanuel R. Aiyede, « Decentralising public sector collective bargaining and the contradictions of federal practice in Nigeria », Development Policy Center, 2002, p. 14.

^[15] Kurt Wetzel, Charles Maxey et Daniel G. Gallagher, op. cit., p. 447.

^[16] Richard A. Bock, op. cit., p. 520.

^[17] Ibid., p. 522.

^[18] Ibid., p. 95.

^[19] Ibid., p. 95.