Are bargaining concessions inevitable in recessions? An empirical investigation into union bargaining priorities and trade-offs of pay rises for job security
| DOI | https://doi.org/10.1108/ER-12-2021-0550 |
| Published date | 12 July 2022 |
| Date | 12 July 2022 |
| Pages | 1485-1503 |
| Subject Matter | HR & organizational behaviour,Industrial/labour relations,Employment law |
| Author | Danat Valizade,Hugh Cook,Christopher Forde,Robert MacKenzie |
Are bargaining concessions
inevitable in recessions?
An empirical investigation into
union bargaining priorities and
trade-offs of pay rises for
job security
Danat Valizade, Hugh Cook and Christopher Forde
LUBS, University of Leeds, Leeds, UK, and
Robert MacKenzie
Karlstad University, Karlstad, Sweden
Abstract
Purpose –This paper examines the extent of bargaining concessions in recession through investigating the
effects of union bargaining on pay, job security and workforce composition.
Design/methodology/approach –Drawing on an original survey (n5400) of workplace level trade union
bargaining units in England, the authorsemployed latent class analysis to establish three groups of bargaining
units on the basis of pay outcomes achieved. Linear regression analysis with moderation effects investigated
whether pay rises at or above inflation in conjunction with shifts in bargaining priorities was associated with
decreases in perceived job security and changes in the composition of the workforce.
Findings –Around a quarter of sampled units, concentrated mostly in decentralised bargaining units in the
private sector, achieved pay rises at or above the inflation rate during an economic downturn. Pay rises at or
above inflation in workplaces severely affected by recession triggered changes in bargaining priorities
requiring some concessions, notably in terms of employees’job security. That said, across the sample,
achieving pay rises was associated with improved perception of job security and lesser use of contingent
labour.
Originality/value –The findings uncover a subset of bargaining units able to secure positive outcomes for
workers against a hostile economic tide, whilst demonstrating that concession bargaining is not inevitable but
rather contingent on the micro-environments in which union bargaining takes place.
Keywords Pay rises, Real wages, Recession, Concession bargaining, Job security
Paper type Editorial
Introduction
What do unions do during recessions? Are unions able to secure pay rises without making
concessions in other areas? These questions have resurfaced over the last 20 years; a period of
multiple global crises. With economies worldwide facing economic downturns and increasing
rates of inflation in the wake of the COVID-19 pandemic, it is important to advance
understanding of the effects of bargaining on pay rises and other outcomes during recessions.
The literature on concession bargaining recognises tha t in recessions unions often
compromise between pay rises and job security (Beaumont, 198 3;Kaufman, 2002).
However, relatively little quantitative evid ence exists about the specific bargaining
arrangements and contexts under which pay gains during recessions are secured by
unions. More empirical evidence is needed to examine the extent to which any gains in terms
of nominal and real wages involve concession-making in other areas, notably in terms of job
security. In this study, we pose three research questions. Firstly, what are the bargaining
priorities of unions during recession and do pay rises remain a key priority? Secondly, are
Union
bargaining
priorities and
trade-offs
1485
Received 20 December 2021
Revised 29 April 2022
10 June 2022
Accepted 10 June 2022
Employee Relations: The
International Journal
Vol. 44 No. 6, 2022
pp. 1485-1503
© Emerald Publishing Limited
0142-5455
DOI 10.1108/ER-12-2021-0550
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0142-5455.htm
unions able to secure nominal pay rises at and above inflation during recession? Thirdly, in a
recession, do pay rises come at the cost of job security and changes in the composition of the
workforce, in terms of the share of standard and contingent workers?
To answer these questions, we draw on findings from an original survey of trade union
bargaining units, with data gathered from 400 workplace representatives or negotiators
(whichever was responsible for bargaining) in England. Through retrospective questioning
our study explores pay, job security and employment composition outcomes across
bargaining units from the height of the last recession in the UK in 2009 through the ongoing
downturn of 2010–2011, to economic recovery in 2012–2013. We find that significant shifts in
bargaining priorities during recession were associated with a negative effect of pay rises at or
above inflation on perceived job security. However, in bargaining units where priorities
remained stable throughout recession, even if negative consequences were perceived, union
negotiators secured pay increases without concession. The key contribution of the study is to
highlight the heterogeneity in the ability of bargaining units to orchestrate pay rises in
recessions. Real-terms pay rises for workers are achievable without concession during
recession, as evidenced in a subset of bargaining units in this study. Whilst there was some
evidence of trade-offs to secure wage increases, overall, our study indicates that concessions
are not inevitable in recessions, but rather are contingent on institutional and internal
collective bargaining environments.
The paper proceeds as follows. The next section reviews debates around union behaviour
and outcomes during downturns, which shaped our research questions. The following
section explains the survey, measures, and our analytical strategy. Thereafter, we present our
results and conclude with a discussion of the implications of our findings.
Theoretical background
Collective bargaining is the process through which employees, organised through trade
unions, negotiate pay, terms and conditions of employment with employers. Walton and
McKersie’s (1965) seminal contribution recognised the underlying economic conditions as
key to labour negotiations, while Kelly’s (1998) account of mobilisation theory recognises the
importance of policy choices of both the state and employers. The variation of economic
conditions during recession which may augment the opposing interests of employer and
employee, and resulting actions of both parties in the employment relationship are both key
to this paper. A wealth of research points to wage rigidity in recessions whereby nominal
wages resist downward pressure (Barrar and Sullivan, 1988), with unions perceived as
important actors in this process (Blanchflower and Bryson, 2010;Pencavel, 2015;Du Caju
et al., 2015;Kataria et al., 2020). This is typically explained via efficiency wage arguments,
with employers incentivised not to cut wages because of potential effects on productivity,
workers’morale and performance (Akerlof and Yellen, 1986;Teague and Roche, 2014;Wang
and Seifert, 2017). Much less is known about union capacity to secure real pay rises (adjusted
for inflation) and any trade-offs these may involve (Babecky et al., 2010;Bewley, 2021).
Empirical evidence at a macro-economic level points to the association between downward
rigidity in real wages and employment losses (Elsby et al., 2016). However, a number of
studies have suggested that unions may be able to secure real wage increases in recessions
without huge negative effects on employment (Babecky et al., 2010;Bewley, 2021). Which mix
of outcomes prevail is ultimately an empirical question, dependent on specific bargaining
environments, individual union priorities and a host of contextual factors (Simms et al., 2019;
Moore et al., 2019).
Theoretical considerations of concession bargaining in recession should stand with the
recognition that union strategies during downturns are not solely focused on pay (Roche et al.,
2015). Any analysis of pay rises in unionised workplaces during a downturn should also
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