14 September 2012
Some governments unilaterally reformed collective bargaining arrangements at the height of the economic crisis. Reversing those decisions and providing policy support for collective bargaining would be key to recovery, according to the ILO.
Weakening or decentralizing collective bargaining arrangements– as some countries have done during the financial crisis – is likely to lead to more wage inequalities and social instability, the International Labour Organization (ILO) warns.
- Decentralizing the process and letting companies negotiate in the absence of strong national and sectoral agreements, puts downward pressure on wages and working conditions, says Susan Hayter, ILO’s senior industrial and employment relations specialist to ILO News.
The sharp rise in wage inequality in the United States and the United Kingdom in recent years can be directly linked to the decline in union membership and the associated decline in coverage by collective bargaining agreements.
When there is significant policy support for collective bargaining mechanisms, such as in Denmark, Finland, France, the Netherlands and Sweden, the gap between the highest and lowest wage earners is significantly lower.