THE REFORM OF JOINT REGULATION AND LABOUR MARKET POLICY DURING THE CRISIS

The impact of the labour market reforms on collective bargaining in the manufacturing sector

A. Koukiadaki, I. Tavora and M. Martinez-Lucio

The issues• Transmission of the economic crisis to the labour market via the

adoption of policies of ‘internal devaluation’ (Armingeon and Baccaro 2012)

• Process of labour market reforms: transfer of policy-making processes from national to international actors (Dahan 2012, Meardi 2012)

• Reforms centred on employment protection legislation and national systems of collective bargaining (Deakin and Koukiadaki 2013)

• Debate around the implications of the reforms for the systems of collective emerging but also the future of EU social policy (e.g. Marginson, 2014; Meardi 2012)

Research focus• What are the implications of the reforms for collective

bargaining arrangements at cross-industry, sectoral and company level?

• What are the government and social partner strategies and approaches towards the reforms in collective bargaining?

• What is the extent and nature of changes in management policy and practice and trade union approach at sectoral and company level concerning the process and character (conflictual or consensual) of bargaining?

• What are the implications of the reforms for the content and outcome of collective bargaining at sectoral and company level, especially on wages and working time?

Research methodology • 7 country comparative study: Greece, Ireland, Italy,

Portugal, Romania, Slovenia and Spain

• Coordinating team plus 7 research teams

• Systematic review of the prior regulatory traditions in social dialogue and collective bargaining

• Collection and analysis of primary data on the social partners’ approach and strategies to the labour market reforms and conduct of company case studies

• Focus on the manufacturing sector: One common subsector to all countries (Metal) and additional industries

Labour market reforms in 7 countriesCountry/

topicWage-

determination

& national CB

Company-level

derogations/favourability

Changes in extension

rules

Agreements’ duration/

after-effect

Other representation

channels

EPL

Greece X X X X X XIreland X  X  X     X

Italy   X     XPortugal X X X X X X

Romania X X   X  X X

Slovenia   X        X

Spain X X X X X

Impact of the measures on the structure of bargaining

• Acceleration of decentralisation but differences between disorganised vs organised forms of decentralisation (cf. Greece and Ireland versus Italy)

• Three types of collective bargaining systems in light of the reforms (see also Marginson, 2014):1. Systems in collapse: Greece and Romania

2. Systems in corrosion: Ireland, Spain, Portugal, Slovenia

3. Systems in continuity: Italy

The impact of the reforms on the structure of collective bargaining

• Key factors explaining the different state of the systems

1. Extent of the crisis but mostly extent of labour market reforms (cf. Greece and Romania versus Slovenia and Italy)

2. Pre-existing strength of the bargaining systems (i.e. in terms of articulation/coordination)

3. Scope for social dialogue in the process for the adoption of the reforms or in coordinating attempts to contain unilaterally imposed reforms

The impact of the reforms on the outcomes of bargaining: wages

Decentralization Reduced coverage

Negative impact on workers not

covered

Suspension of favourability principle,

opt-outs and derogations

Negative impact on wages even for covered workers

Weakened bargaining position of unions

Negative impact on wages even for

covered workers

Cuts/freezes to the NMW

Negative impact on wages of the most

vulnerable

The developments in working time

• Short time working schemes : Greece, Portugal, Ireland and Romania• Increasing use of part-time workers: Greece • Cut to overtime pay: major strategy in Portugal; also observed in

Greece along with reducing the use of overtime • Time banks: used by some Slovenian employers; major response in

manufacturing in Portugal• Working time flexibility was introduced via sector agreements: Italy,

Portugal and Slovenia • Still informal arrangements widespread in Portugal and Slovenia• Even though working time decreased in most countries,

management flexibility to raise it increased, particularly in Spain• Lower employee control and predictability of working hours, with

negative consequences for work-life balance

Growing divisions in the workforce

• Pay differences between existing and new workers (Greece & Ireland)

• Age inequalities enabled by national policies, namely in Greece where NMW is much lower for younger workers

• Temporary agency workers not covered by CB in Slovenia, so they are paid below the sector standard

• Gender pay inequalities in Portugal due to a NMW freeze and blockages in bargaining in female sectors

• Weakened protection of low skilled and vulnerable workers• Increasing numbers of workers not covered by collective

bargaining and in non-standard arrangements

The approach of employers and unions • Employers:

• Fast in taking up the new options under the reforms to reduce labour standards and undermine the nature and form of the labour movement (e.g. Greece, Romania, Spain and Ireland); cf. evidence of some legacy of social dialogue in Portugal, Slovenia and Italy

• Real demand for the preservation of sector level bargaining and its remit (e.g. Italy, Portugal and Spain) for reasons including burden on smaller firms and politisation of labour relations

• Trade unions: • Difficult position balancing the defence of their core representatives and the structures of

joint regulation on the one hand and the need to create some kind of bridgehead for the more excluded workforce outside of those structures

• Adoption of a more realistic strategy within the trade union movements, especially those from a social democratic and centrist heritage: objective of maintaining agreements even if not applicable to all workers and including significant wage cuts

• The state: • Withdrawal of support by the state in certain areas (e.g. legal underpinning for the

favourability principle and extension of collective agreements) but greater intervention in other areas (e.g. setting of minimum wage levels). Questions over resources in terms of labour enforcement

The burden of de-regulation and the emerging limits of the state

• The training budgets for collective bargaining, labour law and consensus-generating activity have been reduced to the extent that there is little public investment in longer term social dialogue issues. The state has withdrawn from a consulting role and in effect not guided such reforms with any proactive ideational policies.

• This will contribute to an even greater level of fragmentation within regulatory processes, and within smaller to medium sized firms a reliance on external organisations and actors such as consultancies. It may actually politicise relations and tensions even more.

• The reduction of public sector budgets means that the state personnel are under great pressure to service basic state functions let alone these more strategic functions. It is likely we will see a more liberalised management mind set emerge with a declining understanding of regulation.

• This problem is clearly also relevant in terms of labour standards enforcement. All the seven countries have seen significant decline in the way the state monitors the application of collective agreements and dealt with questions of non-implementation.

• Furthermore, in most of the seven national cases we are seeing the erosion of resources for the juridical and legal apparatus of the state.

• What we are seeing is that the longer term strategic dimensions of the state are declining in significance as the shorter term and more immediate aspects of the state are directly drawn into the space of employment relations.

The current state of affairs• Shift of regulatory space from joint regulation between the

social partners to the state and the employer • Question over the cognitive resources/capabilities of the

actors for responding to the re-politicisation (Fairbrother, 1998) of industrial relations

• Wider implications: collective bargaining reduction, dualisation of labour market, increase of informal economy, juridification of bargaining and introduction of new actors (e.g. consultancy firms, lawyers) with uncertain outcomes

• Speeding-up of the Europeanisation process: 1. (ad hoc) intervention in greater number of labour market issues; 2. move away from ‘soft law’ measures to ‘harder’ forms of intervention via sanctions etc.

The need for re-orientating the policy objectives

• Move away from ‘regulated austerity’ under the current EU institutional arrangements

• Development of better links between wage and productivity growth and fairness, whilst sustaining domestic demand is essential

• Promotion of a European ‘solidaristic’ wage policy and equitable wage developments based on strong bargaining institutions (Deakin and Koukiadaki, 2013; Schulten and Muller, 2014)

• Role of multi-employer bargaining in acting as ‘beneficial constraint’ (Streeck, 1997, Marginson, 2014) minimising the externalities of market and policy-driven adjustments

The need for re-orienting the decision-making processes

• Establishment of more rigorous impact assessments, especially in the context of macroeconomic adjustment programmes and bail-outs

• Involvement of a wider set of EU actors and institutions in the design, implementation and monitoring of assistance programmes and other forms of supranational intervention (e.g. through Council-Specific Recommendations) in national social policy issues

• Promotion of participation of all key actors and social partners at national level and greater attention to the social dimension and capacities of the social partners

Thank your for your attention!• For further details see: https://

research.mbs.ac.uk/european-employment/Ourresearch/Currentprojects/Socialdialogueduringtheeconomiccrisis.aspx