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Impact of collective bargaining on workplace performance assessed

The presence of trade unions and the collective bargaining relationships in place in a workplace have little effect on its performance, according to a UK study published in May 2002. The study maps collective bargaining arrangements and examines their links with two measures of performance - the quality of the employee relations climate and perceptions of financial performance.

In May 2002, the Department of Trade and Industry (DTI) published a study, commissioned from the independent Policy Studies Institute, examining in detail the relationship between different forms of collective bargaining and workplace performance. The report, Collective bargaining and workplace performance by Alex Bryson and David Wilkinson (DTI Employment Relations Research Series, No. 12), analyses findings from the 1998 Workplace Employee Relations Survey (WERS). It employs 'multivariate' statistical methods to model the relationship between collective bargaining and key outcomes and to control for the effects of a large number of other possible influences. The research was stimulated by changes in the structure of collective bargaining during the 1990s, notably the simplification of arrangements resulting from reductions in the number of trade unions recognised for bargaining, and moves towards 'single-table bargaining' (where several unions negotiate as a group).

Earlier EIRO features (UK9811159F; UK0001252F) have summarised the 'headline' results of WERS, which is based on a representative sample of workplaces in Great Britain. WERS covers workplaces with at least 10 employees and embraces 2,191 workplaces, together with 28,237 employees from those workplaces. The new study reports on the whole survey, whereas many published analyses are restricted to workplace with 25 or more employees.

Patterns of collective bargaining

The study confirms a shift away from bargaining with trade unions. Only 36% of workplaces recognised unions, and fewer than half of these (representing 14% of all workplaces) had more than one union. Negotiation by each union separately occurred in 5% of workplaces whereas arrangements approximating to the single-table model occurred in 8%. These figures are particularly notable when set alongside published results based on workplaces with 25 or more employees. For example, unions were recognised in 45% of such workplaces; the inclusion of smaller establishments underlines the retreat from collective industrial relations in Britain.

The study identified three situations regarding collective bargaining:

  • no bargaining;
  • bargaining, but covering fewer than 50% of workers; and
  • bargaining covering 50% or more of workers (majority coverage).

Overall, majority coverage occurred in 29% of workplaces, with minority coverage in a further 7%.

In the private sector, unions were recognised in 21% of workplaces. In only 12% was there recognition and a majority of workers covered by collective bargaining. Comparable public sector figures were 83% and 59%.

Financial performance

Managers were asked to rate the financial performance of the workplace in relation to the industry average. Though replies were skewed in the 'above average' direction, previous research suggests that the measure is robust in assessing relative performance. Union recognition and the nature of bargaining arrangements were found not to be related to performance. Research using earlier surveys found a negative union impact on performance, but in the new study’s words, 'strong unions are no longer associated with poorer performance' and instead there is a 'positive effect of mid-strength unions where the workplace is operating in difficult market conditions'.

Employee relations climate

Managers and employees rated the quality of overall relationships at the workplace. Of managers, 90% gave ratings of 'very good' or 'good'. Employee ratings were lower, with 55% giving one of these two evaluations.

Managerial ratings of the employee relations climate were largely unrelated to bargaining arrangements. However, where some but not all workers had their pay determined by collective bargaining and where managements supported unions, the climate was improved. The study suggests that the climate may thus be best where there is a balance of power in the workplace.

Employee perceptions of the employee relations climate were worst where each union negotiated separately. Management support for unions and employee perceptions that unions were effective tended to promote a better climate.

The study also throws interesting light on the effects of managerial practices. The presence of an employee relations specialist in the workplace was found to be associated with poor perceptions of the employee relations climate among employees. The extent to which the workplace used a series of 13 measures associated with human resource management (HRM) was also analysed. Effects on climate and performance were generally absent.

Commentary

Commenting on the report, Alan Johnson, minister of state at the DTI responsible for employment relations, said: 'This research shows that partnership in the workplace can deliver real benefits.' This is something of an over-interpretation, for the study had no specific measures of 'partnership' and many of the effects identified were weak. There was a suggestion that the union role can be positive where market conditions are difficult. As the study notes, there are several possible explanations of this result.

WERS is a general-purpose survey, and in many respects the study has taken analysis about as far as it can go in testing complex ideas such as partnership. There are, however, other performance measures in WERS, such as the level of labour turnover, that could be addressed further.

As for the measures concerning management organisation, the negative effect of an employment relations specialist on the climate parallels earlier research showing similar effects in other areas. The usual explanation is that specialists tend to be appointed where employment relations are difficult, rather than that their presence directly worsens relationships, but research would be needed to test this. The results for the HRM measures are consistent with research suggesting that HRM may work only in specific conditions.

Perhaps the core message is a simple one. The majority of workplaces do not recognise trade unions, and particularly in the private sector substantial collective bargaining coverage is a rarity. Any performance effects of specific bargaining arrangements seem to be far too insubstantial to affect the attitudes to collective bargaining of the majority of employers. (Paul Edwards, IRRU)

Page last updated: 23 September, 2002
About this document
  • ID: UK0209104F
  • Author: Paul Edwards
  • Country: United Kingdom
  • Language: EN
  • Publication date: 23-09-2002