Research highlights the impact on employment relations from the transformation of labour market policy during the economic crisis

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A recent research project led by academics at the School of Law and Alliance Manchester Business School at the University of Manchester (Dr Aristea Koukiadaki, Dr Isabel Tavora and Professor Miguel Martinez Lucio) sought to understand how crisis-driven policy measures, implemented across Europe, have reformed aspects of collective bargaining in manufacturing firms providing greater flexibility to employers in the way they set the terms and conditions of employment.

The research was funded by the European Commission and coordinated by academics in the University of Manchester with the collaboration of teams from various European universities.

Labour market measures are radically transforming national systems of collective bargaining in a number of EU Member States including those countries examined and compared in the research: Greece; Ireland; Italy; Portugal; Romania; Slovenia; and Spain.

In each of these countries, research teams carried out interviews with government officials, trade unions and employer associations to conclude the following findings.

 

Economic impact

  • Excessive focus on reducing wages may over the long term undermine real productivity gains and potentially reduce competiveness and sustainable economic growth.
  • The measures weakened trade unions and constrained joint regulation, leaving many employees receiving below-acceptable rates of pay or losing their jobs.
  •  The measures are being used in many cases to undermine and change the role of joint regulation as in collective bargaining which can undermine more organised and settled HRM systems.

Social impact

  • Reforms led to divisions and inequities in the workforce, such as differences in pay and working conditions between existing and new employees; along gender and age lines; and between those in permanent contracts and those in atypical employment.
  • In some countries such as Greece and Romania, the measures led to unintended negative outcomes, such as the growth of the grey market and undeclared payments that reduce the state’s revenue from taxes and social security contributions.

Labour relations impact

  • Employers and HR managers are concerned with the ability of local management to cope with greater decentralisation and change with greater decentralisation. The pressure of local and site level management and Human Resource specialists appears to be growing as they have to engage with issues more directly in competition with other firms and their workers.
  • Trade unions have been increasingly constrained in their ability to regulate and monitor agreements, although they have begun to formulate strategies to sustain their role – raising the awareness around low pay issues, and sustaining a combination of mobilisation and negotiation strategies.
  • Austerity measures have had a great impact on areas such as labour inspection, judicial processes and state mediation services, which are undermining the state’s ability to respond to legal and monitoring issues.

 

Dr Aristea Koukiadaki (School of Law) commented: “Based on the research and the three core impact themes, eventually there must be a greater co-ordination of pay setting and working conditions if we are to support the reduction of inequalities and the development of productive and efficient workplaces.”

Dr Isabel Tavora (Alliance Manchester Business School) commented: “Our research highlighted how employers in many cases value the role of collective bargaining in terms of social peace, good dialogue with workers and the limiting of low wage competition that produces unfair outcomes for both employer and workers.”

Professor Miguel Martinez Lucio (Alliance Manchester Business School) commented: “In southern Europe the pressure of austerity and public sector cuts are undermining the role of the judiciary and labour enforcement mechanisms in terms of labour rights and the application of labour law leaving workers more vulnerable than ever in recent times”.

The findings have been published by the ETUI in Brussels in a book Joint regulation and the labour market policy in Europe during the crisis and summarised in a blog.

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