“The Role of Collective Bargaining in the Global Economy: Negotiating for Social Justice” – written by Susan Hayter

Today Sunday September 1, 2013.

Dear Nader,

Wishing you and everyone a happy labour-day long week-end!  I thought that it would be fitting for the occasion to provide some material on the history of collective bargaining since collective bargaining is under serious attack by governments throughout the world who are espousing a neo-liberal agenda which seeks to deprive the working class of the right to make its claims on the tremendous added value it creates for the society in the course of carrying out work.

According to these neo-liberal forces, collective bargaining and collective agreements are an impediment to the economy and something which has to be curtailed significantly by governments.  Collective bargaining, they say, can only be based on what is profitable for the monopolies and must at all cost serve their interests.

It has become the rule rather than the exception that in Canada any negotiations which do not accept these confines are abruptly ended by acts of parliament and outlawed leaving the trade-unions and the workers they represent faced with the prospects of criminalization and heavy fines if they choose to pursue the fight in defence of their own rights in the society.

The following is an integral reprint of section 1.1 of the introduction of the book written by Susan Hayter which was released on May 30, 2011 entitled:  “The Role of Collective Bargaining in the Global Economy:  Negotiating for Social Justice”. 


“Collective bargaining is a process of negotiation between the representatives of an employer (or employers) and of workers. The intention of these negotiations is to arrive at a collective agreement that will govern the employment relationship. This typically covers issues such as wages, working time, and other working conditions. Since collective agreements also regulate labour relations they are likely to address the rights and responsibilities of the respective parties. Collective bargaining is premised on a well-defined employment relationship and the freedom of workers and employers to associate to an organization that represents their interests. It is a means to address work-related issues in a way that accommodates the interests of all parties concerned. Collective bargaining involves a process of joint decision making and is thus distinct from other forms of governance such as government regulation, individual contracts and/or the unilateral decisions of employers”. – Susan Hayter


The origins of collective bargaining can be traced to the industrial revolution in the 18th and early 19th centuries, a period of profound technological, economic and social change that started in the United Kingdom and then spread to Western Europe, North America, and other parts of the world (Kaufman, 2004). The transition from manual home-based to mechanized factory-based production dramatically increased the intensity of production and transformed labour relations. At the same time demographic changes and the steady flow of people from the countryside to industrial cities led to a rise in the numbers of people available to work in factories. Workers sought to protect themselves from the effects of new production methods and increased competitive pressures by forming organizations capable of representing their interests to employers and the government (Windmuller, 1987).

Some of the first workers’ organizations were guilds of craft workers who regulated entry to the trade. Others functioned as mutual benefit societies, offering protection against loss of income due to illness, unemployment or old age. Some of these early organizations reconstituted themselves as representatives of wage earners in large-scale industries.  Faced with problems of child labour, long working hours, low wages and unsafe working environments, these early trade unions demanded improvements in wages and working conditions. Since they had the power to withdraw all labour in support of their demands, employers could either bargain with them or face a strike and loss of production. Collective bargaining thus emerged as a means to balance otherwise unequal (individual) bargaining power in employment relations and redress the deep inequalities and injustices of the period. Collective agreements also protected workers from some of the adverse effects of competition by establishing a common rule – standard rates of wages and conditions of work for wage earners in a particular factory, trade, industry or region.

Many employers resisted these early attempts by workers to engage them in a process of joint rule making. Their actions were supported by public policies that derived their justification from the doctrine of economic liberalism. These gave preference to individual contracts of employment thus weakening trade unions and retarding the development of collective bargaining (Windmuller, 1987). The tide began to turn when some countries amended their laws to remove restrictions to the formation of a trade union and legal obstacles to the right to strike. This was followed by enabling legislation that protected the right of trade unions to conclude collective agreements.

Against the backdrop of a severe economic depression in the early 1930s, growing awareness of the limits of free markets and rapidly declining living standards, policy makers in many countries took steps to promote collective bargaining as a means of regulating wages and working conditions.  For example, in the USA, the National Labour Relations Act in 1935 (also known as the Wagner Act) provided employees with the statutory right to form, join and assist labour unions and conduct collective bargaining. It included among ‘unfair labour practices’ the refusal of the employer to bargain with a union that the majority of workers have chosen as their bargaining agent (Iserman and Wolman, 1947).  In France, following a general strike, the incoming government, employers’ confederation and union signed the ‘Matignon Agreements’ on 7 June 1936, which removed obstacles to trade-union organization, granted a 40- hour work week and led to the enactment of the right to collective bargaining. The new Collective Agreement Act of 24 June 1936 permitted the extension of collective agreements in an occupation or industry as a way of protecting employers and workers from competitive labour practices which might otherwise undermine standards in collective agreements (Hamburger,1939).

It is worth noting that in some countries the regulation of collective bargaining emerged from agreements between employers and unions. For example, in Sweden, following a period of industrial conflict, employers’ organizations and trade unions negotiated a ‘December compromise’ in 1906 which recognized freedom of association and other rights. This led to the conclusion of a number of other agreements and culminated in the Basic Agreement of 1938. Legislation simply codified rights that had become generally recognized in collective agreements. Similarly in Norway, an agreement between the employers’ association and worker confederations in 1935 set out the procedure for collective bargaining. By the mid 1930s, a report of the International Labour Organization (ILO) noted ‘the increasing importance of the collective agreement as an element in the social and economic structure of the modern industrial community . . . in many countries the collective agreement is now a recognized method of determining working conditions’ (ILO, 1936, p. 265).

The legal and institutional arrangements that developed for the conduct of collective bargaining differed across countries. In some countries, notably those in continental Europe, collective agreements were incorporated into the legal system as a new source of regulation. Others such as the United Kingdom emphasized the voluntary nature of collective bargaining and autonomy of the parties. In Australia and New Zealand, a system of arbitration was put in place and its awards were the outcome of collective bargaining (Bamber and Sheldon, 2007).

In 1944, in the wake of the Second World War, the ILO adopted the Declaration of Philadelphia, annexed to the ILO Constitution, which reaffirmed its founding statement that ‘labour is not a commodity’ and that ‘lasting peace can be established only if it is based upon social justice’, and recognized the ‘solemn obligation of the International Labour Organization to further among nations of the world programmes which will achieve: . . . the effective recognition of the right to collective bargaining’. The international community adopted a series of new international instruments including the Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87) and the Right to Organize and Collective Bargaining Convention, 1949 (No. 98) which came to be basic international law on the subject (Rogers et al., 2009).

These international instruments gave renewed impetus to the development of collective bargaining. The institutional arrangements for collective bargaining continued to vary, reflecting the policy orientation of the government, the priorities of workers, employers and their organizations and historical institutional factors. For example, many countries in Western Europe developed a tradition of multi-employer bargaining at a sectoral or inter-sectoral level. In countries such as the USA and Japan, single-employer bargaining at the enterprise or establishment level became the predominant mode of collective bargaining. Some authors attribute this to a historical compromise which reflects the nature of industrialization.

For example, employers in the chemical, clothing, construction and metalworking industries in countries such as France, Germany, Italy and Sweden engaged in collective employer action in order to counteract the influence of strong industrial unions and neutralize the (individual) workplace from trade union activity. In the USA and Japan, the relatively large employers that emerged during early stages of industrialization insisted on single-employer bargaining (Sisson, 1987).

Collective bargaining was also gaining ground in the developing world in the 1960s and 1970s. In French-speaking Africa, collective agreements tended to be negotiated at the industry level. In English-speaking Africa, most collective bargaining took place at the enterprise level, with the exception of countries such as Kenya and Ghana where it took place at the industry level. Some post-independence governments adopted relatively interventionist approaches to wage and income policies and kept a tight rein on the union movement.  Collective bargaining was also expanding across Latin America, although it was limited to particular sectors such as the oil, energy, metallurgical, building and transport sectors. As a general rule, collective bargaining was conducted at the enterprise level, with the exception of some industries in countries such as Argentina, Mexico and Venezuela (Bronstein, 1978).

In Asia, some governments repeatedly stated that its practice be subordinated to the objectives of economic and social development and limited the scope of collective bargaining. Collective bargaining developed largely at the enterprise level, with the exception of a few countries and industries (ILO, 1976). In later years, industrial relations in developing countries tended to shift away from the pervasive state intervention that characterized the early independence period. With the transition from authoritarian to democratic rule in many countries in Asia, Latin America and Africa, industrial and economic democracy was extended to workplaces, and employers and unions assumed more responsibility for establishing employment conditions (Fashoyin, 1991, 2010).

Collective bargaining became widely recognized by scholars as a key instrument for regulating working conditions and employment relations in a manner that ensures fairer distribution of productivity gains; improves working conditions and enhances the dignity of workers; takes wages out of competition; legitimizes rules and institutionalizes industrial conflict.

Some of the legal literature stressed the importance of collective bargaining as a counterbalance to the power of the employer. For example, Kahn-Freund, a preeminent legal theorist in writing on labour and the law states: The conflicting expectations of labour and management can be temporarily reconciled through collective bargaining: power stands against power. Through being countervailing forces, management and organized labour are able to create by autonomous action a body of rules, and thus to relieve the law of one of its tasks. (Kahn- Freud in Davis and Freedland, 1983, p. 69)

Over time the scope of collective bargaining expanded in many countries to include issues such as job security, training, parental leave and equal opportunity. Chapters 2, 3 and 4 in this volume provide insight into issues on this expanded bargaining agenda. Through collective bargaining, innovative, responsive and reflexive forms of regulation were crafted in respect of issues such as working time, as discussed in Chapter 3. In other countries, particularly those where collective bargaining was only beginning to emerge, collective agreements addressed a more limited set of issues, sometimes only referencing minimum standards prescribed in national law.

Towards the end of the 20th century, rapid economic and technological change and the integration of product and labour markets exposed enterprises to greater competition and placed pressure on labour standards. Policy makers were increasingly concerned with the need to promote labour market flexibility (Brodsky, 1994). The regulation of labour markets, whether emanating from collective agreements or governments, was seen as a source of inflexibility (discussed further in the next section).

In this context, some of the literature on collective bargaining began to emphasize the role that unions could play in enhancing enterprise flexibility, efficiency and competitiveness. In some countries a rollback of policy support for collective bargaining, structural changes in labour markets, rising unemployment and an increase in non- standard forms of employment (fixed-term, temporary agency and part- time work) resulted in a decline in both union membership and the coverage of workers by collective agreements.  In others, collective bargaining coverage remained stable as innovative bargaining practices were adopted and collective bargaining structures adapted. For example, faced with growing demands for enterprises to be more flexible, efficient and competitive, sectoral and inter-sectoral agreements in countries such as Austria, Belgium, Denmark and Italy began to allow for subsequent articulation of wages and working time through negotiations at the enterprise level. In practice, this meant that the focal collective agreement concluded at the most important bargaining level delegated particular issues to regulation at a lower level, within a binding framework.

This ‘organized decentralization’ within a multi-level bargaining system helped maintain a high degree of coordination of bargaining activities and high levels of collective bargaining coverage, while at the same time enabling the parties to address the specific needs of enterprises and of workers at their workplace (Traxler, 1995).

In 1995, in the context of increasing globalization and growing concerns over labour standards, the Copenhagen World Summit for Social Development defined a set of ‘fundamental’ workers’ rights. This paved the way for the adoption in 1998 by the ILO of the Declaration on Fundamental Principles and Rights at Work according to which member States have a constitutional obligation to respect and abide by the principles concerning four fundamental workers’ rights, namely: freedom of association and collective bargaining, the elimination of forced labour, the abolition of child labour and the elimination of discrimination at work. These core labour standards are widely cited in bilateral trade agreements, international financing contracts and in corporate social responsibility policies. Chapter 11 addresses a particularly important development, which is the inclusion of these core labour standards in international framework agreements between global union federations and multinational enterprises.

The status of collective bargaining as a fundamental right has been reinforced by a number of landmark decisions. In 2007, the Supreme Court in Canada ruled that Canada’s Charter of Rights and Freedoms protects the right of union members to engage in collective bargaining.  In 2008, the European Court of Human Rights for the first time recognized the right to collective bargaining as an essential element of the right to form and join trade unions as protected by Article 11 of the European Convention on Human Rights.

As Chapter 10 shows, the global economic crisis that unfolded in 2008 revealed a number of imbalances, not only in the financial industry, but also in respect of the labour market institutions, such as collective bargaining, that provide countervailing power to powerful financial and business interests. The asymmetric nature of globalization allowed for greater ease in the movement of capital (not labour) and tilted bargaining power in favour of employers. Before the economic crisis, wages had been stagnating, wage inequality had been increasing and the share of national income going to labour had been declining in many countries (ILO, 2008).

As Chapter 6 shows, some of the causes of the widening gap between low and high wage earners were the weakening of trade unions and erosion of collective bargaining institutions. The raison d’être of collective bargaining over a century ago had been to balance power and by so doing obtain a fairer share of productivity gains, promote equity, facilitate stability in employment relations and advance social justice. In the face of significant economic progress but growing inequality and other imbalances which threatened jobs and incomes, the ILO adopted the Declaration on Social Justice for a Fair Globalization (2008) which again places collective bargaining at the heart of efforts to ensure that economic and social progress go hand in hand.

*Susan Hayter is a senior industrial and employment relations specialist for the United Nations at the International Labour Organization.  Her book is available for sale on the internet. 

Note that the Canadian Union of Postal Workers is contesting through the Canadian courts Bill C-6, An Act to provide for the resumption and continuation of postal services, which was passed by a vote of 158-113 on June 25, 2013 by the Harper government, effectively ending collective bargaining between the union and the corporation to renew the 2007 work contract.   Bill C-6 also contained heavy fines such as $50,000 for union officers, $1,000 for members of the union and $100,000 for the union for each day it would defy the legislation.

The following article has been written by Jim Nugent and published by TML Daily in its July 25, 2013 online edition.  It is a most interesting reflection on what the Harper government is doing at this time and one which should be shared.

HOW FAR IS THE HARPER DICTATORSHIP PREPARED TO TURN BACK THE CLOCK ON WORKERS’ RIGHTS?   Retrogression has become a fact of life.  In the current situation, unless workers become actively engaged in the fight to block the retrogression the Harper dictatorship is imposing on the working class, nation-wrecking will continue. K.C. Adams writes:

“Harper’s Parliamentary Secretary Pierre Poilievre and others in his government express the dictatorship’s contempt for equilibrium and the rights of the working class when they attack not only specific items within public sector collective agreements but collective agreements in general. The dictatorship speaks of collective agreements and workers’ rights with derision implying they are impediments to productivity, and an unnecessary and even criminal restriction of economic affairs and trade. This anti-working class sentiment and bias and distortion of the socialized economy lead owners of capital to use not only their economic power to destroy unions and existing collective agreements but also to use the legal authority and the full power of the state machine in Canada, Quebec and the provinces to outlaw and criminalize trade unions and their freely negotiated collective agreements. In addition to Bill C-60 and C-377, for the Harper government and governments in many other jurisdictions the issuing of back-to-work orders criminalizing and ending strikes has become commonplace.”

This underscores how profoundly retrogressive the Harperite agenda is. According to the Harperites, collective agreements and workers’ rights “are impediments to productivity.” They are “an unnecessary and even criminal restriction of economic affairs and trade.” This was in fact explicitly expressed by the government when it used or threatened to use legislation against airline workers, rail workers and postal workers. Its so-called justification was that the economy is already weak because of the global crisis and that free collective bargaining would make the economy more vulnerable.

The idea that unions constitute a criminal restriction of trade is an archaic concept from the 19th century. The Harperites’ revival of this concept shows that they consider the overthrow of the post-World War II social contract a battle already won and are determined to push the clock back even further.

Although unions were legal in Britain by the early 1800s, in Canada trade unions existed but were still considered illegal combinations for restraining trade. Unionists could be charged with criminal conspiracy to restrain trade until the Trade Union Act was passed in 1872, in response to mass actions and an upsurge in the workers’ movement at that time. A group of Toronto printers was arrested and charged with criminal conspiracy for organizing a strike in support of the Nine Hour Movement. Agitation for the Nine Hour Movement started in Hamilton earlier and support actions had spread to other cities including Toronto. There were large demonstrations against the arrest of the printers and the Trade Union Act was introduced in Parliament the same day the printers were convicted to try to calm things down.

This “restraint of trade” language was also used in the United States as late as the 1890s. Under the Sherman Anti-Trust Act of 1890 strike actions and eventually unions and unionists themselves could be declared an “illegal restraint of inter-state trade.” It was used by the capitalists against the mass organizing campaigns which American workers were launching in the big industrial sectors in the U.S. Most infamously it was used in 1894 against railway workers in the national strike organized by the American Railway Union (ARU) and its leader Eugene Debs (the Pullman Strike). After courts granted injunctions against strikers under the Sherman Act for restraining inter-state trade, U.S. President Cleveland Grover used the U.S. Army to violently smash up the ARU strike in the name of upholding the injunctions and jailed Debs for contempt.

Leading up to the First World War in both Canada and the U.S. there were efforts by governments to create equilibrium. This basically meant decriminalizing union activities entirely and creating channels to mediate and contain the class struggle through various kinds of tribunals.

In the U.S., the Clayton Anti-Trust Act of 1914 exempted the activities of labour and farm organizations which would otherwise have been considered restraint of trade under the Sherman Anti-Trust Act. This was part of U.S. President Woodrow Wilson’s preparations for entering WWI. He was attempting to create social peace in the homeland, especially to establish an equilibrium with labour needed for war production. The war-time collaboration with the leaders of the AFL is contained in the Clayton Anti-Trust Act:

“The labor of a human being is not a commodity or article of commerce. Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor, agricultural, or horticultural organizations, instituted for the purposes of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws.”

The Harperites have decided that the interests of the privileged minority they represent are best served at this time by throwing out any equilibrium between capital and labour based on recognizing the rights and dignity of labour. How far are the Harperites prepared to turn back the clock on the recognition of workers’ rights? Ask the Alma workers, the Vale Inco workers, the steelworkers and all those fighting for their rights. They will tell you — as far back as the capitalists can get away with!

When the Alma workers asked their president how far the Rio Tinto capitalists were prepared to push retrogression, he answered that there was no limit to the retrogression capitalists would be satisfied with. He said that if the union agreed that workers would work for free and pay Rio Tinto five dollars a day to be allowed to come to work, Rio Tinto would demand more and insist the workers pay ten dollars.

It is up to the workers to deprive the Harperites and the monopoly interests they serve of the power to deprive the workers of the right to affirm what belongs to them by right.


This concludes our Sunday e-mail for this week.  I hope that the information provided to you in this issue will serve to better acquaint you with the important question of collective bargaining and why this constitutes a most important front of battle between the Canadian working class and the monopoly capitalist class as represented by the Harperites at this time.

In Solidarity,

Danielle Desormeaux

Leave a Reply

Your email address will not be published. Required fields are marked *