“In recent times collective bargaining systems have weakened because the original bargaining structures were designed in a different era, when the economy was dominated by industry, high male employment, the so-called single breadwinner model and full-time jobs. Today’s service economies, with many women working, flexible jobs, and self-employment, call for revisiting the standards on how the interests of a variety of workers are represented. Strengthening collective bargaining in these conditions should benefit both the workers as well as their employers. When workers are happy, the employer gains worker commitment and motivation, and can better plan workforce investment and reduce turnover,” says Dr. Kahancova, Founder and Director at the Central European Labour Studies Institute (CELSI).
WageIndicator interviewed Dr. Kahancová to learn about the current state of labour relations in the European Union Member States. They discussed challenges in strengthening collective bargaining, finding the right balance between legislation and bargaining efforts, and differences in how trade unions across various regions in Europe negotiate improved working conditions
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| Marta Kahancová |
How strong is collective bargaining across the EU at the moment? Can you tell us more about the landscape and state of collective agreements?
The data show a continuous weakening of bargaining coverage and union density across Europe, and many employers are unwilling to engage in bargaining with worker representatives. Improving working conditions and governing the labour market require stakeholder involvement. While there is acceptance and need for social dialogue, challenges remain with stakeholder motivation to engage in dialogue. At the same time, there should be legislation that enables social dialogue and collective bargaining, and that creates a framework for implementing the binding outcomes that social partners agreed upon..
At the EU level, political statements support social dialogue and aim to strengthen social partners, but these aims are not always realised at the country level. Additional push, support, and discussion is needed to strengthen social dialogue and improve collective bargaining. The EU Directive on Adequate Minimum Wages aims to ensure statutory minimum wage adequacy and promote collective bargaining, setting binding rules for the Member states. Each Member State must transpose the Directive into their legislation and develop an action plan to meet its targets.
This Directive seeks to unify the EU by improving workers' access to minimum wage protections, yet it grants Member States considerable flexibility in implementation. For Eastern or Southern European Member States, the Directive is a valuable resource to support collective bargaining and social dialogue. However, Nordic countries, with highly developed bipartite bargaining systems, criticise the Directive, believing their systems are long established and functioning without needing extra regulation from Brussels.From an Eastern European perspective, the Directive is crucial. It has triggered efforts to meet its targets, align minimum wages, and increase bargaining coverage, strengthening social partnerships and dialogue in this part of the world.
Can you elaborate a little further on why you think industrial relations are weakening across Europe?
One of the objective reasons is that when the whole interest representation structures were developed, the economies were completely different. They were based on an industry, with full-time male workers organising in trade unions, and with the unions representing their interests. Now, in service economies with many women in the labour market, a lot of flexible jobs, and a lot of self-employment, it has become much more complicated. The institutional response to these changes takes time; it is not so flexible in adapting to new variations and changing structures in a short period of time
In general, there is support for social dialogue; one must remember that collective bargaining is part of capitalism and it is not a concept that emerged from the socialist past of Central and Eastern European countries, as is often mistakenly assumed. In fact, there was no collective bargaining in socialism; it developed within capitalist structures and independent interest representation. It fosters a healthy relationship where diverse interests converge to find optimal solutions. There is a close relationship between legislation and what collective bargaining can deliver, not only for workers but also for employers.
This was highlighted in the Level-UP! study we did with UNI Europa last year, where we showcased many benefits that employers can gain from coordinated bargaining. For example, when employers coordinate their interests and bargain collectively, they can pool resources. This is especially important for small and medium enterprises, and there are many of them in all sectors. Both parties should have an interest in negotiating because it brings benefits to both workers and employers in terms of worker commitment, motivation, better planning, decreased turnover, and investment in the workforce. These are shared interests.
The Level-UP! project developed arguments supporting coordinated collective bargaining. We reviewed approximately 300 pieces of literature and identified 19 arguments supporting coordinated bargaining at sector or multi-employer levels, such as through multi-employer bargaining. We also analysed collective bargaining agreements (CBAs) and found that those negotiated on behalf of multiple employers often include better provisions and more effectively address working conditions than those negotiated by a single employer. This comparison is detailed in the report we have published.
Do you think there is an optimal balance between legislative measures and collective bargaining efforts, or does one have the potential to undermine the other?
Yes, indeed. I have conducted research and published on this topic, and both legislative measures and collective bargaining are considered institutional resources. However, as you mentioned, they can be either in competition or in harmony.
In the literature, two effects are recognised. One is that legislation provides the basics and opens opportunities for more specific regulation via collective bargaining. Bargaining can be specific to certain sectors or types of workers, while legislation applies to the whole economy, to everyone equally.
On the other hand, if legislation is too detailed, it can overregulate relevant topics that would otherwise be bargained over, reducing the scope of collective bargaining. This has been the case in Central and Eastern Europe over the past 20 years. Social partners were weak, did not trust the bargaining process because it was difficult to reach an agreement. Bargaining rounds often ended up in arbitration or court cases, which required huge resources of social partners and in turn they were not too eager to enter bargaining. As a result, they saw legislation as a safer route and lobbied for new laws, which substituted the role of bargaining.
Now, with changes like the European Directives to regulate wages and bargaining coverage, there is again more room for bargaining. Legislation defines a basic role, but there are new opportunities for additional bargaining. Thus, the two can be either complementary or in competition. If there is too much legislation, it can preempt collective bargaining as a regulatory process..
Could you delve a little deeper into the BARMETAL project itself? Could you provide insights into the metal industry and the dynamics of employee relationships within it? How do these dynamics differ from other industries?
Tthe BARMETAL project is one of the EU-funded research projects that we have been implementing since 2022. The project will end later this year. In the last months of this year, the project looked at how technological changes influence collective bargaining. By technological changes, we mean increased digitalisation in the industry, automation of factory procedures, people being replaced by robots, and the need for special skills to work with digital technologies. We also examined decarbonization, an EU-level policy goal to create carbon-free economies and industries.
We investigated how these processes are reflected in collective bargaining, whether bargaining is evolving to address issues stemming from technological change, and whether we see collective bargaining agreement (CBA) stipulations addressing these issues across different countries. Our focus was on the metal industry, a traditional stronghold for effective employer-employee relations, collective bargaining, and relatively high bargaining coverage. This sector should ideally be at the forefront of these changes as it is heavily impacted by technological advancements and has a robust structure of industrial relations.
The metal sector is distinct from other sectors as it is capital-intensive. If an investor has developed a factory with expensive technologies, workers have more power because relocating such a factory is not easy. In contrast, the textile industry is labour-intensive, requiring a lot of labour but not much capital investment, making it easier to relocate. Historically, the textile industry has moved from Southern Europe to Eastern Europe, and now most of it has relocated to Southeast Asia in search of cheaper labour. This shift means that workers' negotiating power in the textile industry is very low compared to the metal industry, where skilled workers who can operate specific technologies and produce high-value-added products have more bargaining power.
Another characteristic of the metal sector is that it is still male-dominated, which explains some of the differences in bargaining power compared to sectors with high female employment, like services or textiles. The bargaining power of the female labour force is generally weaker. Mechanisms such as extending bargaining coverage, setting minimum wages, and pushing for compliance with living wage standards aim to correct this. However, the differences in bargaining capacities between workers and employers still exist.
Could you provide insights on how collective bargaining agreements differ between European countries? What are the key differences in their approaches?
Let me start again by highlighting some differences. Similar to my previous response where I contrasted the metal industry with the textile sector, there are also significant differences within the metal industry itself. A notable book titled Globalization Under and After Socialism: The Rise of Transnational Capital in Central and Eastern Europe (Stanford University Press, 2018) by Besnik Pula, a professor at Virginia Tech Discusses these distinctions extensively in the Central and Eastern European region.
Pula's book categorises countries along the metal production supply chain. For instance, Germany and France, which are investment-heavy and engage in high value-added research and development phases, contrast sharply with Central and Eastern European countries, which are often focused on mass manufacturing, particularly in the automotive sector. This distinction significantly impacts worker skills, their bargaining power and the interest of employers to invest in skills development
In countries like Czechia, where the automotive industry resembles higher value-added production, workers need specialised skills, which are more scarce and take time to learn. This means that such highly skilled workers have a higher bargaining power. Conversely, countries like Slovakia, which Pula describes as assembly platforms whose competitive advantage in the automotive industry developed based on cheap labour, have a workforce engaged in routine tasks, easily replaceable, and thus possessing lower bargaining power. This results in a higher replacement rate with workers from Serbia or Romania, as the necessary training is minimal.
Our findings in BARMETAL align with these differences, largely determined by a country’s position in the supply chain and the structure of its industrial relations. Countries with traditional, robust industrial relations use collective bargaining as a governance mechanism, while others rely more on legislative lobbying, resulting in binding outcomes also for low-wage workers, pro forma bargaining rather than substantive negotiations.
Gerhard Bosch from the University of Duisburg-Essen elaborates on the German experience, where employers actively engage with unions to address technological changes. This results in comprehensive collective agreements focusing on skills development, training rights, and continuous adaptation to technological advancements. In contrast, Central and Eastern Europe have not yet reached this stage. Large companies like Volkswagen and Ikea have developed internal training systems in collaboration with educational institutions, substituting state policy and collective bargaining.
How is digitisation affecting industrial relations and job security in the metal industry, and how are unions addressing these challenges?
As I mentioned before, we see a lot more digital technologies coming into production. The typical scene of an automotive manufacturing site these days is not people assembling cars, but robots instead. Previously, someone might have been working with a screwdriver, and their performance was measured by the number of twists per hour. Now, all this has been automated. This requires specially trained people who can handle, program, and work with the robots, demanding specific skills from the workers.
Employers must find these skilled workers, but there is a shortage because it takes time for people to receive the right education and continue a lifelong vocational training. You don't find people with these very specific skills just on the labour market or out on the street. This necessitates broader changes in the education system to open new study directions targeting the interests of automotive manufacturers with more digitalization and automated processes.
Now, what happens to the worker who no longer needs to do the screwdriving? The worker can retrain, or go off to work in another sector. The coordinating role here is very important. We cannot assume the workers affected by automation know what is best for them. Often they do not realise this is the reality and if they do not retrain they can lose their job. There should be someone to advise them, indicating that the labour market needs certain skills. In my country, there is a big gap because the government is supporting extensive retraining activities, but they are completely decentralised. The worker is left to figure out what is best for them, which is challenging. There is a lack of counselling and support. Here, there is a huge opportunity for unions to help navigate workers through technological changes, telling them, for example, that there is a forecasted need for truck drivers with specific skills to manage autonomous vehicles. This way, the worker would know which skills to invest in and what kind of training to pursue. At the same time, this is an opportunity for the state to cooperate more closely with employers to forecast the skills needed in the future and adjust the education system.
This support is really missing — from the state, from trade unions, and partially from employers. The largest employers, often part of multinational companies, know what they need and do it internally without involving unions. But there are many small and medium companies in the supply chain too.
Currently, at least in this region, unions are not strong enough to provide the necessary individual counselling for workers. They mostly focus on political efforts to change legislation, whereas what is needed here is micro-level fieldwork to counsel individual workers.
June 2024