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Home , Collective bargaining

global worker | special report

Text: Jenny Holdcroft

Deregulation and attacks against collective bargaining have contributed to a huge rise in global inequality. Harnessing union power for achieving industry level agreements is crucial in the fight for living and against .

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19 global worker | special report

Industry bargaining under attack Market fundamentalism, that destructive ideology which still dominates policy A typical pair of jeans made making despite its role in causing the in Bangladesh retails for global economic crisis, remains the major driver of labour market deregulation and anywhere between US$30 decentralization of collective bargaining. and US$50, or more for These policies have led directly to the a prestige brand. But the decrease in collective bargaining coverage, and the consequent increase in income worker who makes them only inequality. receives 10 cents. A 2013 report by the European Commission found that bargaining with multiple employers was the best guarantee to Portugal and other European countries of broad bargaining coverage. It also found in economic difficulty. In May 2014, a overwhelming evidence of a trend towards report by the European Foundation for decentralization of collective bargaining, the Improvement of Living and Working beginning in the 1980s and accelerating Conditions (Eurofound) found that in during the economic crisis. the countries hardest hit by the crisis (Greece, Portugal, Ireland and Spain) the decentralization of collective bargaining 2 was accelerated. Massive declines in collective bargaining Today the world’s richest one per cent coverage have been witnessed in the UK, own 50 per cent of the world’s wealth. Australia and New Zealand where right- Staggeringly, the richest 85 people in the wing governments introduced legislation world possess the same amount of wealth designed to curb union power by as the world’s poorest 50 per cent. dismantling industry bargaining. After the introduction of the Since 1990, the share of GDP (gross Contract Act in New Zealand in 1991, domestic product) from wages has fallen 3 multi-employer agreements fell from 77 steadily across the world. Workers are per cent to 20 per cent of all agreements. being squeezed while global corporations By 2000, multi-employer bargaining had chase bigger and bigger profits. Apple The advice given by the International collapsed. Bargaining coverage decreased recently announced the highest-ever Monetary Fund (IMF) to Greece, Portugal from 61 per cent in 1990 to 18 per cent quarterly profit by a public company – and Spain during the economic crisis in 2010. Wherever industry bargaining US$18 billion. It is sitting on cash reserves was to allow employers to opt out of is replaced by enterprise bargaining, of US$142 billion. Meanwhile workers are sectoral collective agreements and to coverage nosedives as employers take the paid only US$7 for making an iPhone that decentralize collective bargaining to opportunity to avoid bargaining and unions will sell for hundreds of dollars. the level of the individual enterprise. It completely. The widening gap between productivity reinforced this advice by making labour and growth is highlighted in the market deregulation a condition of its loans ILO Global Wages Report 2014/15 and is directly linked to a decline in collective bargaining. Workers worldwide are being denied access to the mechanism that was expressly designed to promote social stability by enabling unions to negotiate a fairer distribution of the wealth generated by their members. The International Labour Organization (ILO) has found that countries with a large proportion of workers covered by collective agreements have lower wage inequality. But the impact depends on the level of centralization of the collective bargaining system. Under decentralized systems, such as that of the , coverage is lower and wage differentials are higher. The reverse is true in systems with more industry agreements that cover more workers. 4

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negotiations one factory at a time – in Bangladesh alone there are more than 4,500 factories producing for the export industry. Particularly in supply chain industries like garments and electronics, bargaining at the level of individual factories will never be enough to drive up pay and conditions when demands by multinational corporations (MNCs) for ever lower labour costs suppress wages and conditions in a race to the bottom. There are limits to how far an individual factory or business can step ahead of its competitors and unscrupulous MNCs will simply move to suppliers with lower standards and lower labour costs. Likewise, efforts by individual MNCs to raise standards, particularly when these do not include reform of purchasing practices, will meet with opposition in their supplier factories which have to compete with other factories on labour costs. Industry-wide agreements, particularly those with extension provisions, make it very difficult for employers to escape their obligations. They effectively take labour 5 costs out of the competition by creating a level playing field that enables conditions Protecting more workers Living wages in supply chains to improve for all workers in an industry, regardless of who they work for. Negotiating and reaching an agreement In a world of global supply chains, industry with a single employer continues to be bargaining is more important than ever. an important part of work. It South African textile and garment union In many garment producing countries, enables productivity and efficiency gains SACTWU organizes over 80 per cent of collective bargaining structures are weak made by workers to be shared and can textile and garment workers in the country. or absent, and levels of unionization are regulate a whole range of employment The fight for living wages is at the core of low. Over 90 per cent of workers in the conditions that are specific to the enterprise. global garment industry have no possibility SACTWU’s work and the union prioritizes But if not underpinned by an industry-wide to negotiate on their wages and conditions centralized bargaining as the mechanism floor, individual employers will continue - and cannot claim their fair share of the to achieve the best wage outcomes for to avoid trade unions and bargaining to value they generate. workers. SACTWU negotiates in three undercut wages and conditions. national bargaining councils for the A typical pair of jeans made in Bangladesh Company agreements tend to cover only a clothing, textiles and leather sectors and retails for anywhere between US$30 and small percentage of non-unionized workers the outcomes affect over 100,000 workers. US$50, or more for a prestige brand. But (7 per cent on average). Under industry In 2014 sectoral wage increases were the worker who makes them only receives agreements, this rises to over 40 per cent, above inflation. But this well-functioning 10 cents. And this can’t be explained by providing much needed protection to differences in the cost of living. Garment system is under threat. The corporate- workers who do not have the possibility to sector minimum wages in Bangladesh sponsored Free Market Foundation join a union. are currently US$68 a month, unions say is challenging the constitutionality of However, according to the ILO, countries they need to increase wages to at least extending collective agreements to non- with multi-employer bargaining systems US$120 for workers to be able to support parties in court. If the case is successful, and mechanisms that allow collective themselves and their families adequately. workers whose employers are not agreements to be extended to cover members of the bargaining council will be The almost total absence of industry wage additional workers and employers, have left out in the cold. bargaining in the garment industry has higher collective bargaining coverage rates. left workers reliant on ineffective minimum In countries such as Austria, Belgium, wage mechanisms for any pay increases. Denmark, France, Finland, Italy and While fixing at least Portugal, multi-employer bargaining and establishes a common floor, the wages that 1 90,000 workers, including IndustriALL UK affiliates, march in support of the TUC campaign the extension of collective agreements result are well below the level of a living to increase the minimum wage. UNITE mean that more non-unionized workers wage in most major garment producing 2 Georgian unions rally for decent work on the than union members are covered, so countries like Cambodia and Bangladesh. World Day for Decent Work (WDDW). IndustriALL ensuring that the most vulnerable workers Where bargaining does take place in the 3 Iraqi unions rally for better jobs on the WDDW. GFIW are able to benefit from wage increases garment industry, it is primarily conducted that they would not otherwise have the 4 Swiss union, UNIA, campaigning for a national at the level of the individual factory. This minimum wage. UNIA industrial strength to negotiate in their puts an enormous burden on unions that workplaces. 5 Filipino union MWAP rallies on the WDDW. MWAP lack strength and resources to conduct

21 global worker | special report

Protecting precarious workers Negotiating Security Negotiating Security Trade union bargaining strategies Increasingly, a worker’s employment against precarious work Trade union bargain strategies against precarious work conditions are no longer under the control of a single employer. Through the use of sub- IndustriALL’s publication provides concrete trade contracting and agency work, employers are outsourcing their employment responsibility, union bargaining strategies against precarious work, creating multiple employment relationships and concrete examples of collective bargaining and fracturing bargaining units. MNC buyers strategies developed by affiliates to confront at the top of global supply chains do not precarious work and fight back against its expansion. directly employ workers in the factories that It shows how unions are using industry level collective produce their goods, but their purchasing bargaining to extend the protection of a collective decisions have a powerful influence over agreement to precarious workers and to limit wages and working hours. precarious work. For precarious workers, even identifying 6 their legal employer can be difficult, while bargaining is likely to be impossible. agreement, which means agency workers or improvement of Indeed, triangular employment relationships receive the same wages and working structures, including development of are being used by employers precisely to conditions as directly employed staff. representative employers’ associations avoid unions and collective bargaining. where these are absent. The ILO has a key • In Argentina, the oil and gas federation role to play in promoting the benefits of This makes industry bargaining particularly FASPyGP succeeded in negotiating industry-level bargaining to governments, important for precarious workers. By a clause in, among others, the employers and workers, as well as negotiating agreements that cover all gas industry collective agreement providing assistance to governments employers in an industry, including agencies which stipulates that all provisions to make the needed legislative and and sub-contractors, or by extending of the agreement apply equally to administrative reforms. the coverage of existing agreements to subcontracting firms. encompass workers employed by them, IndustriALL will continue to demand a • In South Africa, IndustriALL affiliate unions can ensure that precarious workers return to industry-wide bargaining as the NUMSA has reached several are protected, whether or not they have primary means for setting wages. Only agreements in different sectors been able to join a union. through industry bargaining can we level (automobile, tyre, metal) that aim the playing field and make sure that all Bargaining at industry level can play an at phasing out labour brokers and workers, including precarious workers, are important role in regulating the use of improving the working conditions of guaranteed a fair share of the wealth that precarious work, as well as the working precarious workers. conditions of precarious workers. they generate. • In Denmark, in the industrial production What needs to change? and construction sectors, unions have There is overwhelming evidence that Good for employers negotiated sectoral agreements which industry-level bargaining plays a vital role include protocols on agency work. These in reducing inequality and raising the wage Industry bargaining takes wages protocols state that agency workers floor. Governments need to encourage and out of the competition and sets a must be employed in accordance with facilitate industry bargaining in order to level playing field for employers. The the sector-specific agreement, covering extend collective agreement coverage and incentive then is to compete on the all aspects of pay, and protection to workers who are effectively basis of efficiency, skills and upgrading other important terms and conditions excluded from bargaining and need it the rather than by undermining wages and of employment. Similarly, an industry most. This will require significant political working conditions. Companies have agreement between Norwegian unions will, particularly in those countries that a collective interest in ensuring that and employer federations subjects supply cheap labour to global supply they are not undercut by unscrupulous agencies to the same conditions of the chains. It will also involve the construction employers paying wages lower than the prevailing rate. This is particularly true in labour-intensive industries such as the garment industry. Industry bargaining takes conflict out of the workplace and is more efficient requiring fewer resources for employers as well as trade unions. Industry agreements provide the certainty to business it needs for investment and growth.

6 Cover of IndustriALL publication ‘Negotiating Security’. 7 Mauritian unions rally to demand a national 7 minimum wage on WDDW. CMCTEU

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