The De-Collectivisation of Pay Setting in Britain 1990-1998: Incidence, Determinants and Impact

Abstract

Overall, collective bargaining coverage has dropped by around fourteen percentage points. This paper investigates the causes and consequences of the decline in collective bargaining in Britain between 1990 and 1998. One in three workplaces that practiced collective bargaining in 1990 had abandoned it by 1998 and the incidence and coverage of collective bargaining in newer workplaces was lower than in the workplaces they replaced. The abandonment of collective bargaining was not associated with an increase in individualised payment mechanisms or with the use of 'high involvement' HRM practices. Workplaces that abandoned bargaining reported less impressive productivity gains than other workplaces. Male wage inequality rose as a result of the decline of bargaining coverage and of weaker unions where collective bargaining remained. Higher levels of job creation in workplaces that abandoned collective bargaining balance these negative outcomes.Collective bargaining, de-collectivisation, wage dispersion