1Struggling to Follow the High Road: Unionised Firms in an Open Economy

Abstract

Collective bargaining is a voluntary process entered into by employers and trade unions to establish pay and working conditions either inside organisations, across industries or at times for the entire economy. Traditionally, collective bargaining has been used by unions to advance the interests of their members in a number of ways. One is to obtain wage rates above those prevailing in non-union firms (Dunlop 1954). Another is to exert some control over working conditions: on this perspective, collective bargaining is a process that seeks to cushion the internal labour market from the full vagaries of competition so that pay and working conditions are stable (Webb and Webb 1920). A third is to establish rules to govern the behaviour of management and employees (Flanders 1970). There is a fair amount of agreement that the extent to which trade unions can advance their interests through the collective bargaining depends on the amount of ‘countervailing ’ power they possess (Martin 1992). One influential view is that the use of countervailing power by trade unions to advance the interests of their members can actually have a beneficial impact o